China has announced that they plan to ban Chinese companies from going public in other countries. Chinese company IPOs are banned.
This is HUGE.
If you are an investor in Chinese stocks or you're interested in popular companies like Nio and Tencent listen up.
The Chinese authorities said that this will only apply to companies that process sensitive or important data but if you think about it... which Chinese stocks DON'T process data?
If you've been following Chinese stocks for some time, this may not come as a big surprise because this has been brewing for some time.
But if you are an investor in Chinese stocks, then suddenly the stakes just got raised and the risks are no longer negligible.
💵 GREAT INVESTING APPS I USE
GET A FREE SHARE WORTH UP TO $150 WITH STAKE (UK, Australia, NZ)
https://hellostake.pxf.io/qnA3xq
You will get a free share if you sign up using this link and deposit a minimum of £50.
GET A FREE SHARE WORTH UP TO £200 WITH FREETRADE (UK ONLY)
https://magic.freetrade.io/join/sasha-yanshin
You need to sign up and make any deposit to get the free share.
SIGN UP FOR ETORO (Global)
https://med.etoro.com/B15358_A95689_TClick_SSasha.aspx
67% of retail investor accounts lose money when trading CFDs with this provider. Your capital is at risk. Other fees may apply.
👍 SUBSCRIBE TO MY CHANNEL
https://www.youtube.com/c/SashaYanshin?sub_confirmation=1
DISCLAIMER: Some of these links may be affiliate links. If you purchase a product or service using one of these links, I will receive a small commission from the seller. There will be no additional charge for you.
DISCLAIMER: I am not a financial advisor and this is not a financial advice channel. All information is provided strictly for educational purposes. It does not take into account anybody's specific circumstances or situation. If you are making investment or other financial management decisions and require advice, please consult a suitably qualified licensed professional.
This is HUGE.
If you are an investor in Chinese stocks or you're interested in popular companies like Nio and Tencent listen up.
The Chinese authorities said that this will only apply to companies that process sensitive or important data but if you think about it... which Chinese stocks DON'T process data?
If you've been following Chinese stocks for some time, this may not come as a big surprise because this has been brewing for some time.
But if you are an investor in Chinese stocks, then suddenly the stakes just got raised and the risks are no longer negligible.
💵 GREAT INVESTING APPS I USE
GET A FREE SHARE WORTH UP TO $150 WITH STAKE (UK, Australia, NZ)
https://hellostake.pxf.io/qnA3xq
You will get a free share if you sign up using this link and deposit a minimum of £50.
GET A FREE SHARE WORTH UP TO £200 WITH FREETRADE (UK ONLY)
https://magic.freetrade.io/join/sasha-yanshin
You need to sign up and make any deposit to get the free share.
SIGN UP FOR ETORO (Global)
https://med.etoro.com/B15358_A95689_TClick_SSasha.aspx
67% of retail investor accounts lose money when trading CFDs with this provider. Your capital is at risk. Other fees may apply.
👍 SUBSCRIBE TO MY CHANNEL
https://www.youtube.com/c/SashaYanshin?sub_confirmation=1
DISCLAIMER: Some of these links may be affiliate links. If you purchase a product or service using one of these links, I will receive a small commission from the seller. There will be no additional charge for you.
DISCLAIMER: I am not a financial advisor and this is not a financial advice channel. All information is provided strictly for educational purposes. It does not take into account anybody's specific circumstances or situation. If you are making investment or other financial management decisions and require advice, please consult a suitably qualified licensed professional.
Hey guys, it's sasha something big just happened, and i wanted to quickly make a video to tell you. China has just announced they plan to ban chinese companies from going public in other countries, including the us. This is huge if you are an investor in chinese stocks. Right now or if you're interested in popular companies like neo and tencent, listen up, because this is important.
There is a caveat in this announcement. The chinese government has said that they will only apply this to companies that process sensitive and important data, but i actually think this is more of an excuse, because, if you think about it, which chinese stocks don't process sensitive or important data now the truth is it Is looking more and more like china wants to protect chinese interests and ring fence their entire industry to keep the wealth and control over chinese manufacturing and technology? And this is in some ways a strange move, because chinese companies get a lot of benefits from being able to list on u.s stock exchanges as become has become actually quite popular over the last 24 months. Those companies get access to the biggest market in terms of the ability to raise funds in the world, but if you've been following chinese stocks closely, then this really should not come as much of a surprise, because this has been brewing for some time. In a recent video on another topic, i actually explained in quite a lot of detail what the risks of investing in chinese companies are, and the biggest risk that i talked about.
Was the chinese government declaring foreign ownership to be against the rules because, well it actually already is? There are already laws in china that do not allow foreign investors to own chinese businesses. Tesla had to jump through a lot of hoops just to open their own factory. In shanghai - and it looks like that, risk is now coming through, and this may be the first step now. Chinese companies that were waiting to ipo or had their ipo port at the last minute will no longer be able to access u.s funding, and this is a big problem and the ability of foreign investors to invest in chinese stocks.
That only trade in china, which is now going to be the case, is extremely limited. Those us adrs that people like that replicate foreign shares, don't really work in this scenario. Now, as china has threatened action over the last few months, the market has reacted. Companies like alibaba and other chinese stocks have had huge drops in their share prices, and investors were at some point flocking in and buying in the dip, even kathy wood who initially sold off her chinese stocks.
Only a few weeks ago that happened. She actually came back. This week and bought some of them, bachelor did a u-turn and so arc went buying the dip as well, except the problem is that that dip has only been getting bigger, and this news is really not going to help chinese stocks are already dropping like flies in Today's trading on this announcement, but it could get much worse because if you take a step back and look at it, is this really where the chinese government is going to stop. You know ban all future ipos, but companies that are already publicly trading in new york are just okay. We are gon na go and leave them alone right. Well, i am not so sure i'd say that the risks that i talked about for anyone holding chinese stocks in their portfolio just got a whole lot worse. They got a whole lot more real because remember if you think that you are invested in a chinese company and you live in the united states or in the uk or somewhere else that isn't actually the case. The shares that you own are not shares in that chinese company that you think you're investing in.
Instead, the shares that you own are shares in the cayman islands or some other random holding group that happens to share the same name as a chinese company. That holding group will then have a whole load of very obscure ownership chains that flow down that will own some companies that will own some other companies, sometimes the different jurisdictions, blah blah blah that eventually get down to some companies at the bottom that have a contractual Relationship with that chinese company that you think that you're invested in yeah, they don't own that chinese company, because that would be breaking chinese law. But there is a contract and that company at the bottom of that chain is technically entitled to money. Distributions and things like that, but the problem is, you are not a shareholder, you have no shareholder rights, you have no privileges, no legal repercussions.
You have no shareholder benefits in reality, other than watching the stock price go up and down now, if the chinese government tomorrow turned around and banned this setup outright, the value of your shares in that cayman islands company would be zero and given what we are seeing, I would say that, although that risk is low, it is definitely not negligible, and i don't know about you, but i personally don't like having investments where there is some material risk of that investment going to zero, because the chinese government just decided. So now. All of this is going to drag on for some time. This is not something that is probably going to unveil itself over the weekend.
These new rules will apparently only be implemented sometime in q4 of this year, and if china continues along this path, then any further updates will probably take even longer than that. The big question is what those further developments actually will be. Will chinese companies be forced to de-list and, if so, how will that happen? How will operationally that actually take place? What is going to happen to the share prices? It's hard to tell, because we haven't really had examples of this sort of thing happening before in this way, but in other cases where a company is forced to d list for legal or other reasons, the outcome for shareholders is usually pretty grim now to make this Issue even worse, the u.s securities and exchange commission has been making noises themselves recently as well. They seem to share my view that investments in these offshore holding companies that are nothing to do with the chinese company that you think you're investing in are not as kosher and transparent as perhaps they could be. So the problem gets deeper because even if the chinese government does not do it the sec could they could go and ban chinese companies from trading in u.s stock exchanges, potentially existing ones as well? But will they go that far? I don't know i'd say it's probably unlikely, but if china continues pushing pushing further, if there is a trade war who knows if something else develops in the story, the sec's hand might be forced now take a step back. The stock market is a difficult beast in the best of times, but here, on top of all the other risks that already exist in the market, we have this really serious existential threat to chinese companies, shareholders that seems to be getting more serious every week and the Problem is that, even if nothing happens as an investor, i don't want to invest in something that will make me worryingly check the news every day wondering if the day of reckoning has finally arrived now i do not hold any chinese stocks for this exact reason. I have nothing against the country or the companies. In fact i really like - and i'm really interested in both in my normal life, but as an investor.
Managing your risk is crucial and eliminating serious risks as much as possible is a sound strategy, and i have a feeling that chinese stocks may continue suffering because of this aura. That is surrounding them as a result of all of this for some time yet. Thank you very much for watching. I hope you found this useful.
I really appreciate it and, as always i'll see you guys later.
Trash video, please do some real research. I am a foreigner but invest in China and other places. Making plenty of strong returns.
how do you explain multiple value investors investing in these companies? do you think they are betting on the US not letting this happen?
Thanks for the update Sasha. I am hearing alot of bad things about China recently, including English language teaching is being banned in China (they don't want any foreign influences!). Not to mention the South China Sea, Taiwan issue, transparency on covid origins, etc. The next big war will be with China I suspect. I will be selling out of my Chinese investments next few days and rotating to less risky investments.
Hi Sasha,
First of all, thank you very much for your excellent YouTube content; I really appreciate the insights that you share!
As I’m seeing now you (?) inviting respondents for Whatsapp via a YouTube account with 2 asterikses (**) behind your name, I would like to ensure that this is not as scam, and if not, I would like to join. Can you please clarify this?
Kind regards,
Igor
Interesting to note the number of ‘Chinese’ companies previously trading ADRs supported by murky VIE Cayman structures rushing to list out of Hong Kong. BABA a while back. Then XPEV. Now I notice BILI
So, question: WTF? These ADRs are either ‘supported’ by offshore VIEs that bestow no rights of ownership over the Ordinary equity line (as often no Ords actually are tradable) OR they are possibly now ‘supported’ by Ord listed Equity on legitimate exchanges but in so doing breaking Chinese laws of foreign ownership !!
You literally can not win
Interesting to note the ISA eligibility implications of each option too … but I’m a broken record on that matter so will refrain from mentioning it again …. suffice to say : WTF?
If you are a Chinese person invested in Alibaba or tencent how would that make you feel about the government if the Ccp killed the stock. Even government officials are invested in these stocks.
The risk was already there but for me the risk is still like 10% going to zero for a potential 5-10x.
When I look at the US stock market sure won't go to zero but we will likely see a 20% or a 30% dip in the Spy. So in my opinion still a lot less risky than owning Palantir which would drop around 50% or more in this scenario
A fiat currency can become worthless if governments print too much of it, like in the case of 1920s Germany. This is the reason
You can convert US adr to shares in hongkong. One Adr will be converted to 8 shares in hongkong
There were no bans. They have set conditions. Go back to assessing over valued stocks like Tesla.
I personally think all will be fine. China needs America and America needs China. China want's access to American markets and America want's Chinese companies listed in America.
—– randomly came across this vid, what a waste of time — wow, you must be afraid of your own shadow —– scared money don't make money.
Don't buy fake ADR, if you believe in the company buy in HK. OMG, Amazon is going to be de-listed from Germany (it will not, just an example), operations of Amazon will end, …The company is the same, the bussinness is the same, fundamentals are same. Why do you care about de-listening a fake stock (ADR).
I think your content is always great, I always watch your vids in full & smash the 👍🏼 to help…. I have a concern – please can you advise on Hyperfund . Is it pump dump, everyone is talking about it and saying trust but I think there is something amis and the set up guys past is questionable and is it just promoting another coin indirectly. I value your opinion. Thank you.
People think investors do nothing, but the truth is we trade risk and allocate capital accordingly, that's our purpose in the economy. Communist central planner think they can do this better than free markets.
I moved out of Chinese individual stock a few weeks back instead switched to a Chinese etf where the tickers are HK or Chinese market rather than US
So what if a company such as AliBaba were to delist? Warren Buffet has said that if he had invested in a great company, he doesn't care if the stock market closed down for 10 yrs.
Never bought any Chinese stocks to begin with, de-list away! Hopefully we'll see US/UK stocks rise a bit as a result of that.
Anyone who thinks CCP will act in a way that would be detrimental to their own economy is delusional.
Forget the narrative the news pushes. As someone who has lived in China, I can assure you, many of the Chinese public are on the CCPs side and theres tones that the CCP are doing on the ground to commercialise and globalise their economy
In London, Marshall Wace — one of the world’s largest hedge funds — says Chinese ADRs are now uninvestable.
Everything Money channel bashes loads of growth stocks but just bought/recommended BABA…
Companies like Nio & Xpeng are safe in my opinion. Blackrock alone Owns 60 Million shares of Nio. Just saying.
Only Chinese company I was invested in was Nio but I cashed out and sold all my shares 2 x months ago. I'm not sure about the Chinese governments influence in share prices for the future or indeed transparency of some of the companies. Like crypto to big of a risk for me at the moment.
From reading the news that's come out about this the Chinese government just want to go through the checks before giving IPOs the go ahead.
Why would they want to de-list companies from markets where they can raise the most capital?
My understanding is that China is not banning Chinese companies from IPOing, they are now, based on the Didi disaster, requiring that Chinese companies comply with Chinese laws by completing a pre-check, before they are allowed to list.
With regards to the ADR structure, it is a risk, but it is commonly used by companies from around the world (just search for list of ADR companies) to ensure the potential investment from foreign markets.
With regards to the Chinese equity market (and other emerging markets), I would say it is a mistake not to be exposed, albeit with a proportional smaller part of the portfolio, as the growth opportunities are massive.
Phew, so glad I didn’t buy that Ali baba dip. Was tempting but I didn’t want to add more risk when there are other stocks with equal potential gains. Intuition won out this time!
Ugh 😩 Do I need to flip my NIO into more TSLA, my one and true love?
Maybe China is driving the prices down before buying up stock themselves? (Disclaimer: I Know Nothing 🙂
Yep, this cost me 6k. Would have cost me much more if I had held. I'll never buy any Chinese related funds ever again
Hi there, uncomfortable watching, as I own a 'stock' in China. I thank you for this video though.
Not that it matters, but the company is Ehang.
Great video Sasha as always, I personally don't know why anyone would invest China for the very reasons you talked about
While welcome, Can you do these type of video announcements on a Monday!