Yet Another 2 Reasons to Avoid Chinese Stocks
In the early 20th century, one of the best-performing stock markets in the world was that of Imperial Russia. For decades, stocks on the St. Petersburg Stock Exchange far outperformed those on the New York Stock Exchange, and it wasn't even close. However, when the Bolsheviks took over in 1918, they shut down the stock market and seized all securities for immediate redistribution to the working class, wiping out many investors' capital overnight, if not their lives as well.
This is obviously an extreme example, but China is going through a fundamental shift in paradigm that is enough to make some raise such comparisons. After decades of free-market reforms, the Chinese Communist Party (CCP) is finally taking some minor steps back toward its core beliefs -- and it all starts with regaining some control over the country's burgeoning private sector.
In two previous articles, I outlined multiple reasons why investors should avoid Chinese stocks right now because of these government actions. There were two new developments earlier this week that illustrate why Chinese stocks' descent into the red zone is picking up speed.
Source Fool.com
