When Bridgewater’s Ray Dalio sold its entire stake in JD.com (JD) and Alibaba (BABA), it ended the fairy
tale story of China investing. Dalio was bullish on China’s prospects.
China’s political stance on freedom and capitalism changed sharply in the last few years. Hong Kong’s
attempt to keep its freedom ended recently. China now has firm control of Hong Kong’s government.
More recently, U.S. speaker Pelosi’s visit to Taiwan triggered China’s military aggression. It hosted war
exercises after Pelosi left the island.
Economically, China’s introduction of the “three red lines” ended the speculation in real estate. This
sector is approximately one-third of the country’s economic output. In addition, China blindly continued
its zero covid policy. It did not care about the substantial economic losses from the export a consumer
demand disruption that would result.
Investors may zoom from the macroeconomic troubles down to Alibaba and JD.com. The CCP’s
crackdown on the technology sector is on pause. Investors cannot predict if the harsh policies will end.
Therefore, Dalio’s sell-off on bellwether Chinese stocks is a prudent move.
Your Takeaway
Investors should copy Ray Dalio’s cautious sales. Sell losing positions before they become bigger. Re-
enter the investment if the negative conditions reverse.
