CNBC’s Jim Cramer on Monday urged viewers to remain cautious on the stocks of Chinese companies, contending there’s too much regulatory risk to comfortably own shares.
“I don’t know how much simpler I can make this. When an explicitly communist government forces for-profit companies to turn into nonprofits, it’s probably not a safe place to invest your money,” the “Mad Money” host said.
Despite some investors beginning to believe Beijing’s intense, multiweek crackdown on companies, such as newly public Didi Global, is cooling, Cramer said he’s not buying it.
“Fool me twice, shame on me,” said Cramer, who has for years been cautious on most Chinese stocks but spoke positively about Didi before the ride-hailing giant’s IPO in late June. Just days later, regulators in China announced a series of actions against the company regarding data and privacy allegations.
Other tech firms also faced heightened scrutiny in recent weeks, leading to steep sell-offs in their stocks. The KraneShares CSI China Internet ETF, known by its ticker KWEB, is down 22.65% in the past month. However, in the past five days, it’s up 3.42%.
“After what they pulled with Didi Global and the tutoring companies, I think it’s the height of irresponsibility to give Chinese stocks a second chance” even if some on Wall Street are warming back up, Cramer said.
“Throughout history, we’ve seen dictatorial regimes take tough actions, then they let the smoke clear and make soothing noises, luring in more suckers who they can rip off,” he added. “That’s where we are now. You can try to play this period of calm … but you never know when they’ll start cracking down again.”
