Tuesday, May 11

If you have to buy a Chinese stock, stick with Alibaba

Chinese stocks, especially ones that are new to U.S. markets, may seem like appealing investments, but to CNBC’s Jim Cramer, most of them aren’t worth the risk.

In 2018, 31 Chinese companies had initial public offerings on U.S. stock exchanges, up from 12 the year before. The 2018 deals raised about $8.5 billion in gross proceeds, accounting for roughly 18 percent of the U.S. IPO market.

But aside from a few decent names like Tencent Music Entertainment, which Cramer tentatively recommended after its IPO in December, investors should steer clear of this volatile group, the “Mad Money” host said.

Still, “there are some exceptions,” he told investors Monday. “Larger companies from China with higher profiles do tend to perform better. […] If you absolutely have to dabble in Chinese IPOs, please, stick with the larger, high-quality companies that we know more about, that even can be household names like Alibaba.”

But, even with Alibaba, he insisted that you should invest “only if you want to go there.”

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