China Opportunities After Evergrande

Evergrande's problems and a regulatory crackdown make these Chinese stocks seem like compelling investment opportunities

Vikram Barhat 30 September, 2021 | 10:03AM
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Chinese flag and Evergrande logo

The ongoing saga surrounding debt-laden real estate developer Evergrande and the recent regulatory crackdown on Chinese internet companies have been roiling China’s equity markets in recent months. The volatility has spooked many foreign investors, obscuring the long-term growth story of the world's most populous country and the second-largest economy.

While the current scenario presents medium-term uncertainty, Morningstar’s senior equity analyst, Chelsey Tam, who covers the Chinese tech sector, disagrees with the idea that an enhanced regulatory framework would lead to the demise of Chinese tech names. Another equity analyst at Morningstar, Ivan Su, believes the market reaction on tech names is overblown for several reasons, explained here.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Alibaba Group Holding Ltd ADR177.70 USD0.16Rating
Baidu Inc ADR177.64 USD-1.64Rating
Weibo Corp ADR Class A50.29 USD-0.85Rating

About Author

Vikram Barhat  is a Toronto-based financial writer specialising in investing, stock markets, personal finance and other areas of the financial services industry.