Investing in Chinese Tech: The Proverbial Risk/Reward Scenario April 23, 2021
Alibaba (NYSE:BABA) recently drew the ire of Beijing, reminding investors that political risk is an important issue to consider in emerging markets. Still, the
With Beijing increasingly scrutinizing Chinese tech companies, investors need to do their homework.
“Chinese technology companies have been in the spotlight lately, and a few under-reported details stand out,” notes Liqian Ren, WisdomTree director of Modern Alpha. “When the Ant Financial IPO was delayed, speculation grew about how Chinese regulators would restrict the company. As expected, its financial services are going to be structured under the regulation of a financial holding company. One component that went unanswered is, what to do with Ant’s technology arm? In my view, it may be spun into a separate tech company that would improve its valuation.”
Is Emerging-Markets Investing Worth the Risk?
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As Rare as the Loch Ness Monster, Equities at a 10 P/E
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ETF of the Week: WisdomTree China ex-State-Owned Enterprises Fund (CXSE)
ETF Trends CEO Tom Lydon discussed the
WisdomTree China ex-State-Owned Enterprises Fund (CXSE) on this week’s “ETF of the Week” podcast with Chuck Jaffe on the MoneyLife Show.
CXSE seeks to track the WisdomTree China ex-State-Owned Enterprises Index’s price and yield performance, which is a modified float-adjusted market cap-weighted index that consists of common stocks in China, excluding common stocks of “state-owned enterprises.” Chinese companies that are not state-owned enterprises are defined as government ownership of greater than 20%.
The fund is a tailored emerging market play that cuts out inefficient state-owned businesses. In regards to state-owned enterprises, government ownership can negatively impact the operational efficiency of a company. Government-owned and influenced companies typically run their businesses with a broader set of interests, appealing more to government wish