Last Friday, Oct. 28, 2022, China’s city of Wuhan entered lockdown again. Over 800,000 people in one
district needed to stay at home. China has dozens of cities under some form of lockdown.
Alibaba (BABA), an e-commerce firm in China, and Baidu (BIDU), a search engine, erased its rally last
week. Chances are high that the downtrend that began in late 2020 will continue.
The lockdown disrupts global trade. American firms relying on Chinese workers will face delays.
Already, firms like Apple (AAPL) are diversifying a small percentage of iPhone production. The
company is shifting from China to India to de-risk its supply chain.
Investors must watch out for further selling pressure from Chinese internet firms. Dynamic zero covid is
hurting China’s economy. The Chinese government’s Common Prosperity and regulations against
technology firms could intensify.
In the electric vehicle market, investors should pick Tesla (TSLA) over Chinese EV firms. Nio (NIO)
peaked at $60. Its 52-week low is in the high single digits. XPeng (XPEV) and Li Auto (LI) lost
momentum and could keep falling.
ETF investors may watch CWEB or KraneShares CSI China (KWEB). Neither stock is a buy until it
forms a sustained uptrend.
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