over 3 years ago • 2 mins
Chinese companies and Western investors are more connected than ever – and as one local drinks firm grows bigger than Coca-Cola and an emerging ecommerce giant sees its share price double in three months, accessible Chinese stocks are attracting attention 👀
China Pacific Insurance this week became only the second company to participate in an ambitious scheme linking up the London and Shanghai stock exchanges. But other options are available for Western investors looking to grab a slice of Chinese firms.
Five-year-old Pinduoduo, which marries discount online shopping and entertainment, followed larger rival Alibaba’s example by listing on the US stock market back in 2018. Since mid-March, however, the etail middleman’s stock has risen 150% on news of order volumes bigger thaneBay’s – making Pinduoduo the world’s most valuable unprofitable company 😮
And it’s not the only Chinese firm raising eyebrows among overseas investors. The rising share price of Kweichow Moutai, maker of an iconic (and expensive) local liquor that’s the world’s best-selling, leaves it more valuable than Western drinks giants AB InBev, Diageo and Heineken put together. Not only is Moutai China’s most valuable company period – it’s also profitable.
Foreign individuals can’t buy Chinese shares directly, although limits on institutional investment notably scrapped last year. But for those looking to grab a slice of the action, these stocks are relatively easy to access 👍
Pinduoduo’s American “depositary receipts” trade on the popular Nasdaq exchange, while exposure to Moutai’s shares – an unprecedented 5% of which are owned by overseas firms – is available either via Hong Kong or through an exchange-traded fund tracking the MSCI Emerging Markets Index.
Would-be investors should take care, however. While Moutai has maintained robust demand even as the global alcohol industry suffers from lockdown, continued weaknesses in its distribution model and sensitivity to corruption crackdowns – its spirits are a favored gift – mean its stock may look expensive.
As for Pinduoduo, some argue that its orders are artificially inflated, its marketing spend is unsustainable, and its CEO wields far too much power. The ignominious demise of Starbucks rival Luckin Coffee and the resulting scrutiny of Chinese listings in the US should not be forgotten…
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