China’s Evergrande real estate company, has been in the news recently. The massive company has some serious debt problems that have caused stock markets in the U.S. to experience volatility. I get the question often; ” Should we be buying Chinese stocks? ”
Many major Chinese companies have huge amounts of debt, which is a concern. However, my biggest reservation with China is the ongoing government regulation and control of Chinese companies. Two major Chinese companies, Alibaba and Tencent Holdings have faced scrutiny and regulatory pressures recently. China’s President Xi Jinping is another major wild card in the mix regarding investing in China. His role in regulating Chinese companies shows no signs of slowing down. In addition, he is seeking to remain in power after his term is completed. This goes against the party’s system of leadership succession. It just seems a lot could go wrong in China.
One could certainly make a Bullish case for investing in Chinese companies. The growth there seems unstoppable. An 8% +/- GDP growth rate is certainly impressive, although there are some signs that growth is starting to ease up a bit. Nonetheless, I feel that there are ample investment opportunities in US companies, as well as, other, more stable areas of the world.
I don’t feel the need to “Swing At Every Pitch”.
