Chinese Stocks - Short-Term Pain for Long-Term Gain

Should I dump all Chinese stocks because of regulations as a foreign investor?

If you are asking the question *NOW* then you really need to rethink your portfolio.

What the Chinese government has been doing in the last few weeks is nothing unusual, and if it spooks you then it might be better for you to sell everything now because you likely never should have invested in Chinese stocks

If you read the 10-K and prospectus for the stocks there is this whole section on risk factors saying that the stocks could take because of government policy.. If you are nervous now it means you didn't read the prospectus and didn't do your homework.

On the other hand the roller coaster works both ways. You shouldn't surprised if the Chinese government makes another announcement in six months that causes the markets to rise.

Also the fact that the Chinese government is willing to let the markets tank two days in order to implement a policy that's wildly popular and they think is long term good for the economy might not be a bad thing. As we've seen with COVID the Chinese government is willing to do short term pain for long term gain.

Hang Seng Index - Stamp Duty Increase Sell Down

Hong Kong unveiled its first stamp-duty increase on stock trades since 1993, sparking a broad selloff in the US$7.6 trillion (S$10 trillion) market and sending shares of the city’s exchange to their biggest plunge in more than five years.

The planned trading-tax increase to 0.13 per cent from 0.10 per cent was part of a raft of new measures announced in Hong Kong’s budget that included increased spending to help residents weather the pandemic. Even as the city’s economy has plunged over the past year, stock prices and turnover have surged amid a global market boom.

Technically, HSI had risen too much and the stamp duty increase give the smart monies a nice reason to sell down their HK shares.  Personally, I view this as temporary sell off as it is like our GST hike, overtime, traders will start trading again as they forgot about the increases.

HSI 5xLongSG230420 (SGX: CWAW)

HSI 5xShortSG230420 (SGX: CXQW)

Rule number 1: Always put a stop loss before entry, always, no exception. You do not drive a car if it does not have brakes. Have a stop loss first, then think about entry, end of conversation.

Rule number 2:: No Rule number 2, strictly master Rule Number 1 and you are likely to succeed in Technical Trading.