We’re looking at a perfect storm of pain for Chinese stocks right now… The economy was already slowing on a massive scale when the Chinese Communist Party started scrutinizing and targeting its own companies.
As a trader, you have to ask yourself if you really want to be co-investors with a CCP that — at the end of the day — doesn’t want its companies to make “too much money!”
In a situation like this, it’s time to start looking at the best Chinese stocks to short…
The next leg of pain for these stocks has come from the U.S., where scrutiny on accounting disclosures is leading to delisting in Chinese names.
Some of the prominent companies that trade on the New York Stock Exchange are in the danger zone. So much so that I expect months worth of selling from three names in particular…
3 of the Best Chinese Stocks to Short… If They Get Delisted
If the following names I’m about to give you get delisted from the NYSE, we could see…
- 58 days of selling for Alibaba Group Holding Ltd – ADR (NYSE: BABA)
- 156 days of selling for JD.Com Inc. (Nasdaq: JD)
- 315 day of selling for Yum China Holdings Inc. (NYSE: YUMC)
That’s a big deal — huge even — and three money-making opportunities for us…
This epic anti-Chinese stock phase had a pre kick-off when business magnate, investor and co-founder of Alibaba Group, Jack Ma, made derisive comments about the CCP in 2020.
He disappeared for some time and then was far less outspoken when he came back. The stock, however, never recovered…
In fact, even the company itself admitted that it expects weaker revenue growth amid Beijing’s constant regulatory crackdowns and China’s dwindling economy.
Just take a look at this chart.
When a stock goes from over $300 down to $100, the amateur observer might think there’s $200 in upside… That’s a trap.
Not only has the world changed drastically for BABA, but the profitability environment that allowed that stock price also no longer exists in China.
Make sure to check Tuesday morning’s watchlist for the FREE trade idea I have for this stock.
And then there’s JD.Com…
This is a stock with even bigger downside — which I originally thought was impossible. Taking a look at the chart above, JD could lose another 70% from here….
And that’s something worth paying attention to.
Let me know your thoughts on China and the best Chinese stocks to short.
And as always, send any trading questions to jeff@joyofthetrade.com and stay ahead of the markets, especially these choppy ones, by subscribing to our YouTube channel.
