Tensions between the U.S. and China took center stage on the stock markets. China is reportedly proposing a data-collection joint venture. By overseeing data collection from e-commerce and digital payment companies, China would know what all its citizens are doing and behaving.
China’s increasing power in capital markets continued when regulators stopped the IPO of Ant Group. This in turn sent Alibaba's (NYSE:BABA) stock lower. Tencent is reportedly on China’s close watch, too.
iQiyi (NASDAQ:IQ) and Baidu (NASDAQ:BIDU) both fell in the double-digit percentages in the last week. A block trade on IQ may partly explain why the stock faced strong selling pressure. Similarly, Tencent Music (NYSE:TME) fell on a large block sale offered by Goldman Sachs. Investors holding any of the above-mentioned stocks face bad timing. The ongoing uncertainties posed by China on the firms may pressure shares further.
Value investors could pick up BABA and BIDU stock at current levels, betting that regulatory risks are overblown. Still, China cares more about control of its capital-run firms than where it is listed. If IQ and TME stock get de-listed on the U.S. exchange, the Chinese government will not worry about the stock’s decline.
The drop in the widely-traded Chinese stocks will eventually end. Keep watch of them in the near-term for a possible entry price.
