The China government's clamp down on Alibaba, DiDi and most recently China Education stocks have been sending sell signals to many as it shows the government's actions to be involved in the regulation of the industries to prevent monopolisation and data security issues for DiDi.
So some people have let go of their China Tech Stocks while some have went on a buying spree with a discount on the big names. My portfolio has not been affected as I do not hold any indivdual China stocks at the moment but I also find it a good buying opportunity for those who believe in China's growth and it's market. My exposure is mainly throught the World Index ETFs.
I have been buying VT via FSMone through the regular savings plan and I currently have 54 shares of it. Of course, I also shared in my earlier post that I have now made the switch from FSMone to Interactive Brokers as they removed the monthly inactivity fee which means that I am switching and buying VWRA. A few weeks back, I saw a dip in VWRA and decided to intiate a position, though not huge but I am consistently planning to buy in after a few months of building up of cash.
VT exposure to China and VWRA exposure to China
VT is Vanguard Total World Stock Index Fund ETF and assest class includes international stocks with Tencent and Alibaba making up one of the top 20 counters and from the image from etf.com you can see that Hong Kong is at third place with an aloocation of about 4.53%.
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| Taken from Vanguard |
China Tech companies like Tencent Holdings Ltd.(700), Alibaba Group Holding Ltd.(9988) and Meituan Dianping Class B(3690) are companies listed on the HK exchange and also in the Vanguard Total World Stock Index Fund ETF so the price of VT and VWRA has been fluctuating. VWRA also has exposure to China Tech stocks as seen below
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| Taken from etf.com |
Of course this is a really small portion of my portfolio as it is within the ETF. And the price decline is also not as huge as the individual stocks. I believe that those who have a huge exposure to China stocks in their portfolio are experiencing a huge drop. I would say I am not as exposed or affected by it and China has seen exponential growth in their tech companies who really are not just tech companies but kinda like all-rounders like Alibaba and Tencent where they have ventured into communications, e-commerce, financials and music just to name some. Their reach has been huge in China and there are many more companies that are also growing.
How it will pan out
China is a huge market with endless possibilities. And companies like Alibaba, Tencent, Meituan and DiDi have huge number of users already or practically a monopoly as almost everyone has to use their applications for certain functions. This means that they will continue to have their existing businesses or even expand but now what people are looking out for depends a huge part on the government. How much more clamping or measures will be introduced. To be honest, China has a huge talent pool and their technology and companies have grown a lot over the past few years. I believe that the stocks prices will recover or even hit new height but of course, no one knows.
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