China’s Communist Party suffered a setback when its air balloon entered U.S. airspace. The CCP at first claimed this was a meteorological balloon, not a spy balloon.
When the U.S. shot down the balloon and retrieved it, the CCP complained. Its attempt to distract and diffuse tensions did not work. This increases tension between the U.S. and China again.
China tech stocks enjoyed an incredible run since Oct. 2022. China’s end to the lockdown, easing real estate rules, and easing regulations for China tech are the catalysts. The balloon situation undermines the positive trading action in shares of Baidu (BIDU), Alibaba (BABA), and Tencent (TCEHY).
Baidu recently rose in enthusiasm for its development of a ChatGPT. Alibaba rose after the CCP allowed for an Ant Financial capital raise.
Investors bullish on China in 2023 may look at the gaming sector. China approved many games released by Tencent (TCEHY) and Netease (NTES).
The CCP allowed the Chinese to download the Didi Global (DIDIY) ride-sharing app again. This should increase Didi’s prospects this year.
In the electric vehicle sector, Nio (NIO) Li Auto (LI), and XPeng (XPEV) failed to rise during the China tech stock rally. This suggests more downside risks for those EV stocks.
Investors may look at the KWEB ETF instead of individual stocks.
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