Chinese stocks are too risky

Chinese stocks are too risky

A large investment bank avoids Chinese stocks but buys its own bonds.

JP Morgan’s Joyce Chang believes the country’s deregulation actions are intensifying and will create downward pressure on major market groups and industries.

“We really recommended [investors] On Thursday, the company’s president of global research told CNBC’s “Trading Nation”.

Chang predicts that China will actively target companies in waves, and the last one could last a few more months. The regulatory activity is part of its dynamic of “general prosperity” focused on consumers and social well-being.

“These are talking words, and a lot of them are goals by 2035,” she said. “Here is a reason to be careful.”

This week, regulators in Beijing summoned ridesharing apps Didi Global and Meituan for non-compliant behavior. Didi is down 37% and Meituan is down 19% in the past three months.

China also wants more control over its listed shares. The country’s president, Xi Jinping, has said he wants a stock exchange in Beijing for small and medium-sized entities.

“China has made it clear that it still wants to come to the capital, but it wants it on its own terms and it wants it in its trade,” Chang said.

Despite his short-term decline in stocks, Chang is a long-term Chinese bull and argues that the country is owned by global investors. He believes buying his bonds is a strategic way to mitigate the risks of economic growth, while limiting the downside risks associated with regulatory crackdowns.

“Right now the best way to play with China is really just plain vanilla in the bond market,” Chang said. “Chinese government bonds still have very attractive yields compared to the rest of the world.”

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