China – The Slaughter Escalates

Summary

  • No person or institution should ever buy what they do not understand or buy anything that is not verified. The financials of the Chinese companies are whatever the Chinese Communist Party wants them to be. There is no verification of anything.
  • The outreach by the Chinese government is relentless. In their desire to implement the mandates of the Chinese Communist Party, they are putting each and every investor in peril, without limits or boundaries.
  • The situation has gone from bad to worse, and in my estimation, it is going to worsen even from here. I would not own one Chinese stock or one Chinese bond now.

On July 11, I wrote: “China – It’s Quitting Time”.
On July 30, I wrote: “China – Don’t be an Idiot”.

I hope that you were listening. I hope that you paid attention. The situation has gone from bad to worse, and in my estimation, it is going to worsen even from here. I would not own one Chinese stock or one Chinese bond now. The outreach by the Chinese government is relentless. In their desire to implement the mandates of the Chinese Communist Party, they are putting each and every investor in peril, without limits or boundaries.

Bear in mind, there are no restraints to what the Chinese government wants to do. There is no “rule of law.” There is no “due process.” There is no “judicial restraint” at all, and so, investors are being trampled upon en masse. Look to the left. Look to the right. The owners of any Chinese securities are being massacred, and who knows where the axe will fall next? The answer is no one, but I think the odds are darn close to 100% that the siege will continue.

My original concern was that the Chinese government will not allow for audited financial statements on the basis of national security. On this basis alone, I warned, I waved the red flag, I waved my arms in wild abandon to try and keep everyone out of trouble. I used the strongest verbiage that I could muster as I attempted to help all of you steer clear of this burgeoning mess. Since then, the hole has widened, deepened, and the loss of investors’ money has grown by multiples since the first incursion.

No person or institution should ever buy what they do not understand or buy anything that is not verified. The financials of the Chinese companies are whatever the Chinese Communist Party wants them to be. There is no verification of anything. Consequently, as I have stated and stated, they should not be bought, and anything owned should be sold before the knife plunges even deeper.

The Chinese intervention began with DiDi (DIDI), spread to the tech companies, enlarged to the educational sector, and now has found its way into the gaming companies, where China is mandating the people under the age of 12 will not be allowed to play online games any longer. If you think this will be the end of it then, I will respond: “You are out of your mind.”

China’s government just stated that online gaming was “Opium for the mind.” My response is that Chinese securities are “Poison for your purse.” China has become uninvestable, in my opinion, and I cannot say this strongly enough.

One would also suspect that the ratings agencies will make some drastic changes to their ratings, based upon the continuing deluge of prohibitions by the Chinese government. At some point, it may dawn upon them that investors are under siege. One can only hope that they will do the right thing, even if it curtails their revenues. We shall see.

“An enemy generally says, and believes, what he wishes.”

– Thomas Jefferson

The Barbarians are at the gate!

Author: Mark J. Grant, Seeking Alpha

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