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Market Update

4 Very Undervalued Wide-Moat China Stocks

A regulatory crackdown has left some big names at cheap prices.

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A spate of regulatory crackdowns from China’s government on technology and consumer companies has made a wide swath of Chinese stocks sharply cheaper in recent weeks.

Compounding matters for China-based companies, the Securities and Exchange Commission announced in late July that it sought to tighten disclosure requirements for Chinese companies looking to be listed on U.S. exchanges. The new requirements would have China-based firms clearly detail the nature of their Variable Interest Entity vehicle by which they are listed in foreign exchanges and how foreign investors do not directly hold shares in China-based companies but rather a shell company. China-based firms will also need to disclose whether they were denied permission to be listed on foreign exchanges, allowing investors to ascertain whether the company will face future regulatory crackdowns from the Chinese government.

Jakir Hossain does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.