July 20, 2021
China has been a no-brainer for any diverse portfolio and quite frankly continues to be one: a combination of strong economic growth, a flourishing middle class, and a tech sector that benefits from both government investment and looming U.S. tensions. However, owning individual stocks is becoming increasingly risky. Many institutional investors are pulling out of individual investments, causing liquidity concerns. Additionally, compliance with the Holding Foreign Companies Accountable Act is hanging over many investments. Their government prevents companies from having to comply with these auditing measures, but things are changing here. Regardless of how the Public Company Accounting Oversight Board rules, pull-outs are already happening, sinking many Chinese stocks. Investors can look at China Mobile as a precedent for how this delisting process could play out.
FINSUM + Magnifi: The sinking individual stocks are the perfect time to buy low into China in the form of diverse funds that still maintain exposure.
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