Pinduoduo PDD, -2.31% jumped 22% on Tuesday as the Chinese ecommerce group pledged $1.5 billion in future earnings to charity, following Tencent in making sizeable donation as Chinese President Xi Jinping cracks down on the business sector.
“On mean reversion criteria, these tech and related stocks are now cheap as chips,” he tells MarketWatch. But, he says, they should be for trading only, and not for a pension or long-term portfolio. “If many of these firms are being brought to political and regulatory heel, they shouldn’t trade as growth stocks, in my opinion. The valuation shift should be permanent,” he says.
The rise in the gig economy is even more pronounced in China than the U.S., where informal employment accounts for nearly 60% of jobs. This low wage, insecure job situation makes China’s inequality issue so important, he says, especially as its social safety net is not generous.The People’s Bank of China vowed to stabilize the supply of credit and boost the amount of money for smaller businesses, and the country’s third-largest container port re-opened after shutting for COVID-19.