Ali Baba (WKN: A117ME), Ginko Solar (NASDAQ:CCN) and Tencent (NASDAQOTH: A1138D) is very popular Involved. Behind this are fast-growing Chinese companies that are likely to be able to grow exponentially in the future. Unfortunately, Chinese stocks are often riskier than stocks from democratic countries.
Chinese stocks with increased balance sheet risk
In the past, there have already been a disproportionately large number of balance sheet fraud cases among Chinese stocks. Even with adults companies How do shuda modern (WKN: 603198) Or Sino Forest turned out to be fraudulent in the end. The list is too long now. Although many companies were very large, had real business and business numbers were steadily improving, many investors mostly lost all of their commitment.
Of course, despite these cases, the majority of Chinese companies are honestly managed. But getting to know them is not easy, even for experienced investors. Globalism (NYSE: WKN) is a positive example. The origin of the company can be clearly identified by the associated ISIN, which begins with the CNE. But many Chinese stocks usually start with KYG (Cayman Islands) or BM (Bermuda). Even Tencent or Baidu (WKN: A0YCQ6) Among them.
Pay attention to ISIN for Chinese stocks
This block is unique in the world. For example, US stocks can be identified by the US ID, Canadian stocks by ISIN CA, and French stocks by the abbreviation FR. So if the Cayman Islands or Bermuda are used, investors should ask themselves: Why is this particular route being taken?
In the future, specifically threaten these stocks More problems. For example, the US plans stricter audit rules for US-listed Chinese stocks in the future. They begin with the abbreviation of the United States. If they do not meet the requirements, they will be removed from the US exchange.
And due to the growing conflict with the USA, China is also planning to allow its companies to list overseas only with strict approval. However, as a rule, it will be found in Shanghai or Hong Kong in the future.
In order to avoid the risk of delisting from German stock exchanges, it is always advisable to buy foreign shares in your home country. Trading volume is usually higher here and write-offs are less likely. In addition, the start of the ISIN must always match the country. So Chinese stocks should always start with CNE or HK (for Hong Kong).
China tightens regulations
In addition, there is the current tightening of Chinese regulatory measures. It’s another risk, especially for big Chinese stocks like Tencent or Alibaba Didi (NYSE: A3CTLG). The regulations are intended to restore control over companies and limit their power. How far they will go is unexpected. But as the education sector shows, the Communist Party is not shy about outright bans.
As in the case of BYD, at least formal requirements must be met to purchase foreign shares.
clause Chinese Stocks: These risks now stem from Alibaba, JinkoSolar and Tencent stocks! First appeared in Motley Fall Deutschland.
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Christoph Welzel has no position in any of the stocks mentioned. Motley Fool owns shares in Alibaba Group Holding Ltd. and Tencent Holdings.
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