Thread by @JoshuaTai0427

'China risks'
Recently, because of the Chinese ed-tech platform being regulated and turned to 'non-profit', there are many voice and concerns about the 'China political risks' again. Here are some of my rough thoughts.
$BABA $JD $BAIDU $TCEHY $PDD

The short answer is that i believe there are always and always going to be the 'China' risks, and this is just an incident that brought the risks right in front of our eyes.

What happens when a risks is showed in front of everyone? Everyone become fearful and worry about things, that is just the human nature of us as investors. Am I worry too? Definitely. However, I am not over worrying the situation.

In my opinion, Chinese stocks are already having a 'China discount'. However, this incident may just make the China discount even bigger. In the short run, no one will knows what will happen with the valuation and especially the multiple that investors are willing to give.

Multiples are determined by people's emotions and fear. Now people are fearful and worry about the Chinese risks, and hence a lower multiple of China stocks. Are $BABA, $JD, $PDD, $TCEHY, $BAIDU fundamentally worse? Not really in my opinion.

Fundamentally, there's no change to their business, and their workers are still trying to work hard to make their customer happy. The Chinese economy is still booming. It's just that the outside situation have changed. People are worrying that regulations might change.

To me, I don't want to spend too much time worrying about regulations because i cannot predict what will happen with regulations and I have absolutely no clue on it. I just want to focus on the fundamentals, is the business still growing? delivering growth?

For me, when I hold Chinese stocks, I already know there is Chinese risks, and now, its just the market and Chinese government coming to my house, asking me: Hello do you still have convictions in your stock? Want to sell instead?

For me, I have great convictions as of now, and a lower price means potentially better returns in the future. But that may just be for me, I am alright with the China risks, I think i can live with it, and Chinese companies still have a long way to grow.

If you think you can't deal with the 'China risks', maybe Chinese stocks are not for you, because I am pretty sure such incidents may happen to other industry or sectors again, we could just never know. The market will be knocking constantly on your door checking your conviction.

I think the most important thing is just to position your China holdings according to your perception of the China risks and your risks tolerance level. Don't panic sell, don't sell because of someone's advice, and don't buy because of others saying now Chinese stocks are cheap.

Remember the most important thing through this time is just your conviction over Chinese companies and your worry over the Chinese risks, only you know what your conviction and worry are. Therefore, only you can decide whether you should buy or sell.

Lastly, please don't panic! and spend sometime processing the information, trying to think about alternative arguments, and different perspective, only make your decisions after thorough thoughts and considerations! Don't rush!

Hope you all have a great day and make the best investment decisions for you whether its in Chinese companies or any other great quality companies in the world!