Investors holding China-based stocks need to follow several major events. China reported weak economic data in the last week. The elections in Taiwan over the weekend followed. And the next leg down for electric vehicle stocks hurt China EV firms by more.
On Jan. 12, China reported a larger-than-expected trade surplus increasing to $75.34 billion in December 2023. In contrast, the country posted deflationary consumer prices for the third straight month. China's CPI fell by 0.3% Y/Y as pork prices fell and demand for goods weakened. The ETFs that investors should avoid include KWEB, FXI, YINN, and EWH.
Technology firms fared poorly, too. Baidu (BIDU) lost 7.0% last Friday on reports that the Chinese military uses AI. The connection between a military lab and a commercial large language model could lead to the U.S. adding more sanctions against those firms.
Meanwhile, China's EV firms are on a strong downtrend. Despite securing billions in investments, Nio lost 8.3% in the last week. Li Auto (LI), BYD, and XPeng also lost value. Hertz (HTZ) is selling off 20,000 Tesla (TSLA) vehicles. It will use gas-powered vehicles instead. This suggests that all EV players will face major headwinds in the year ahead.
