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CNBC’s Jim Cramer on Monday urged viewers to remain cautious about stocks of Chinese companies, saying there was too much regulatory risk to comfortably own stocks.
“I don’t know how much I can simplify this. When an explicitly Communist government forces for-profit companies to transform into non-profit organizations, it’s probably not a safe place to invest your money,” said the host of “Mad Money”.
Although some investors are starting to believe that Beijing’s intense weeks-long crackdown on companies, such as new state-owned Didi Global, is cooling off, Cramer said he’s not buying it.
“Cheat on me twice, shame on me,” said Cramer, who has been cautious for years on most Chinese stocks but spoke positively of Didi ahead of the rideshare giant’s IPO in late June. Days later, Chinese regulators announced a series of actions against the company over data and privacy allegations.
Other tech companies have also come under increased scrutiny in recent weeks, leading to massive sell-offs of their stocks. The KraneShares CSI China Internet ETF, known by its ticker symbol KWEB, lost 22.65% last month. However, in the last five days it has increased by 3.42%.
“After what they’ve done with Didi Global and the tutoring companies, I think it’s the height of irresponsibility to give Chinese stocks a second chance,” although some on Wall Street are heating up, said To screw up.
“Throughout history we’ve seen dictatorial regimes take tough action and then they let the smoke clear and make soothing noises, attracting more suckers than they can rip off,” he said. he adds. “That’s where we’re at now. You can try to play through this period of calm… but you never know when they’ll start to hit again.”
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