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Proprietary Data Insights Financial Pros Top Non-U.S. Stock Searches This Month
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Investing in China You might have noticed that Chinese stocks listed in the U.S. haven’t performed well lately. In fact, they’ve been downright terrible. But hey, at least they trade, unlike Russian stocks. Renewed fears of companies like Alibaba (BABA) delisting prompted a huge selloff. Shares of Alibaba are down more than 75% from their highs in 2020 and close to their IPO price. Effectively, these stocks have become uninvestable. There were plenty of pundits out there saying fears of delisting were overblown and these stocks were trading at fantastic discounts. Looks like the markets disagree. Given the geopolitical environment, it’s not a question of if but when these stocks will be forced to delist. Can you still invest in China? Yes but with caution. ETFs like the Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) invest directly in Chinese companies listed in China. So you don’t have the risk of delisting. However, you do need to consider whether the Chinese government might change the rules of the road and kick them out at some point. Another avenue is to invest in stocks like Wynn Resorts (WYNN) and Las Vegas Sands (LVS), which receive the majority of revenues from Macau. If you believe the Chinese consumer will rebound along with normal travel, then these are trading at fabulous prices. |
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China |
Silicon Valley of China Shuts Down |
Key Takeaways:
It’s been a while since Covid appeared in the news. That all changed this week when a wave of cases rolled across mainland China. Shenzhen & Shanghai Lock Down Home to Apple (AAPL) supplier Foxconn, Shenzhen China forced all non-essential public service operations to shutter. Shenzhen is the largest city in the manufacturing hub of the Guangdong province. It’s often referred to as China’s ‘Silicon Valley.’ Officials confirmed 400 cases in late February, prompting the government’s zero Covid policy to go into effect. Hundreds of miles away, the coastal city of Shanghai pushed schools to online classes, with select neighborhoods entering lockdown and conducting mass testing, keeping residents in lockdown until they receive a negative test result. Your Patio Set Will Arrive in 2032 One of the longest wait periods consumers face is for furniture. With many components shipping from China, the average wait time is anywhere from 3 to 8 months. West Coast ports are still reeling from the increase in volumes from 2020. The port of L.A. continues to see more than 100 ships waiting to offload and tens of thousands of empty containers littering the docks. The Bottom Line: Apple hasn’t said whether we can expect delays in iPhones. Chances are it will impact total sales for the quarter. The longer the city remains closed, the greater the revenue loss. Short-term, it may give ports in Southern California a chance to work through the backlog of vessels. However, this situation serves to remind us of two things: Covid is still here and we need more manufacturing capacity here at home. We would avoid all Chinese stocks listed on U.S. exchanges. The risks are simply too great at this point. |
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