Calum steven Beck
๐‚๐ก๐ข๐ง๐š ๐๐ž๐š๐ซ ๐Œ๐š๐ซ๐ค๐ž๐ญ HK and US listed Chinese stocks are currently in their biggest bear market ever. With many stocks down over 60% from their all time highs. They trade at roughly a third of their US equivalents, and also roughly a third of Chinese shares listed in China. There are a few reasons given for this: 1) Fallout from the collapse of Evergrande $03333.HK (China Evergrande Group) 2) Increased regulations 3) Risk of delisting ๐‚๐ก๐ข๐ง๐š'๐ฌ ๐’๐ญ๐จ๐œ๐ค ๐ฆ๐š๐ซ๐ค๐ž๐ญ ๐ญ๐ž๐ฅ๐ฅ๐ฌ ๐š ๐๐ข๐Ÿ๐Ÿ๐ž๐ซ๐ž๐ง๐ญ ๐ฌ๐ญ๐จ๐ซ๐ฒ The first 2 risks we might expect to see impacting China's own stock market, but mainland shares are not seeing a huge sell off and are only around 9% off all time highs. This tells us that the Chinese themselves are not concerned. ๐ƒ๐ž๐ฅ๐ข๐ฌ๐ญ๐ข๐ง๐  ๐Ÿ๐ž๐š๐ซ๐ฌ ๐š๐ซ๐ž ๐ฐ๐ž๐ฅ๐ฅ ๐จ๐ฏ๐ž๐ซ๐›๐ฅ๐จ๐ฐ๐ง The final risk is 2-fold. Some have rumoured that China may crack down on the VIE structure used by Chinese companies to list outside China. However, Chinese regulators have recently confirmed they won't ban the structure and even gave the go ahead to Didi to list in Hong Kong using the structure. VIEs have been around for 2 decades without problems and have been upheld in Chinese courts. The other risk of delisting is the SEC may force Chinese companies off US exchanges if an agreement is not reached regarding US auditing of those companies. This is more realistic than the VIE fear, but in most cases will just mean that shares are transferred to Hong Kong, this is already possible for companies like $BABA (Alibaba) . The companies will still hold the same intrinsic value, and in fact will have dividends taxed less! ๐’๐ญ๐ซ๐š๐ญ๐ž๐ ๐ฒ I think this is a huge buying opportunity, with upsides in many cases of over 300%. I've been increasing exposure to stocks that are listed in Hong Kong or are eligible to list in Hong Kong, while reducing exposure to those ineligible for secondary listings. Additionally I've added companies like $03908.HK (China International Capital Co) which stand to benefit from increased IPOs in Hong Kong. They also don't use a VIE structure and are valued 3x higher in mainland China than in their Hong Kong listing! 2021 may have been rough for Chinese stocks, but keep calm! There is huge opportunity in remaining patient! ~Lordfoofoo ๐Ÿ’  ๐Ž๐Ÿ๐Ÿ๐ข๐œ๐ข๐š๐ฅ ๐ž๐“๐จ๐ซ๐จ ๐•๐š๐ฅ๐ฎ๐ž ๐ˆ๐ง๐ฏ๐ž๐ฌ๐ญ๐จ๐ซ ๐Ÿ’  Relevant indices: $China50 $SPX500
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