When the Biden Administration issued a ban on semiconductor technology chips for China, it crippled
Chinese technology stocks. The market correctly anticipates that Alibaba (BABA), Baidu (BIDU), and
Tencent (TCEHY) will face tremendous innovation challenges ahead.
China already tightened regulations against domestic firms. This weakened their prospects months
before the U.S. ban.
China’s rise in the technology space will slow considerably. It will fall behind the U.S. in developing
artificial intelligence, automation, machine learning, and surveillance. The U.S. wants to weaken China’s
use of technology in the military sector.
Throughout 2022, Alibaba, an e-commerce firm, tried to rally. The strong rallies fizzled every time. Risks
of delisting from the U.S. exchange hurt the stock. More recently, the Chinese government allowed the
SEC to audit Chinese firms. This is the first step in sustaining a U.S. listing.
Anything can happen from here. The trade war tensions worsened since they began in 2016. Western
investors holding Chinese tech firms are taking a considerable risk. Still, any hint of agreement between
the two countries would send Chinese stocks higher. Investors may hold an ETF like CWEB or KWEB
stock. This exposes a portfolio to a basket of the aforementioned tech firms.
