Chinese ADRs and what's happening

[aja8888]

While the Russian equities, ETFs, and businesses are being slowly put to death, here is an eyeopener as to what is going on with Chinese stocks:

https://wolfstreet.com/2022/03/10/a...-plunged-below-its-2007-price/#comment-416639

Folks who’ve tried to ride up the Chinese miracle economy by investing in American Depositary Receipts (ADRs) of Chinese companies, such as Alibaba, Baidu, and JD.com, have ended up in a toxic devastating mess. Dip buyers, if they didn’t get out in a New York minute, were carried out on stretchers. Wall Street investment banks that had been instrumental in listing these ADRs raked in large amounts in fees. And the actual Chinese companies in China raked in the funds that investors in the US forked over to buy these misbegotten ADRs at the time they were offered.

There are over 200 China ADRs traded on US stock exchanges. Last year, before it all came apart, they still had a combined market cap over around $2 trillion. Today was another day when dip buyers in these ADRs got their heads handed to them.

Short article that is a good read.

 

[Montecfo]

very interesting. A tempting nibble at least as far as BABA is concerned. But have not so far after selling at much higher levels.

 

[Fermion]

I nibbled on some of the Chinese stocks about 10 years ago and got creamed...never again.

ADR = bad

 

[plex]

ADR's are just an investing vehicle, they are often exchangeable with their home market should the ADR end. There are not big structural problems with them, unlike SPAC's, which are basically geared towards ventures that cannot get through or easily use the typical much better vetted IPO process.

China is simply going through a bubble pop, fueled by Evergrande et al., a similar QE policy to the US, and a dissimilar populist tech crackdown. It is when you start seeing these sorts of articles on a regular basis for awhile that these types of markets geting quite appealing.

 

[aja8888]

It will be interesting to see which Chinese ADRs eventually get delisted on the US exchanges.

 

[Phroig]

I picked up a few BABA and Tencent today. We’ll see.

 

[Chuckanut]

Maybe people are waking up to the risks of investing in countries with authoritarian rule?

 

[pb4uski]

I nibbled on some of the Chinese stocks about 10 years ago and got creamed...never again.

ADR = bad

No, more precisely Chinese ADR = bad

The problem is that China is interfering with efforts to assess whether the audits of these Chinese registrants are worth the paper that they are written on... but that hasn't been a problem in other parts of the world like Europe, etc.

 

[Phroig]

No, more precisely Chinese ADR = bad



The problem is that China is interfering with efforts to assess whether the audits of these Chinese registrants are worth the paper that they are written on... but that hasn't been a problem in other parts of the world like Europe, etc.

+1

My timing turned out to be fortuitous; both Alibaba and Tencent had nice gains this morning. I don’t care for the political risk, so I’m out.