As there is still no indication of the regulatory crackdown, investing in the tech sector at this current juncture could result in a high risk of catching falling knives. On the flipside, the attractive valuation and rapid growth of these China Tech companies may strike as a good bargain to long-term investors. The sell-off of some tech stocks were not a result of any fundamental changes, but rather investor sentiment, which could change again in a flash. First, we must understand the short and long-term impact of the crackdown. Here are 3 fundamental factors you may want to consider if you decide to buy the dip:
1. Will policy changes cause structural change to business’s model?
2. Companies’ valuation
3. Companies’ growth
The big question for investors is whether the pullback in Chinese tech companies is just another short-term purge prior to re-establishing the prior growth trajectory or whether it represents deeper issues.Click HERE to subscribe to Fuller Treacy Money Back to top