What happened
Chinese e-commerce leader Alibaba (NYSE: BABA) has had a few hectic months since its billionaire founder Jack Ma gave a speech in October that the Chinese government did not like.
The stock has fallen 20% since then, but reversed the trend today with a gain of more than 4% as of 3:30 pm EST.
Image source: Getty Images.
And
In addition to the domestic problems that the company’s founder is facing, the U.S. government has indicated that it may require the closure of some Chinese companies with links to China’s military and security services. Alibaba is internet giant Tencent Holdings (OTC: TCEHY) since then, they are on investors’ radar as potentially included in this ban. But the latest list of companies linked to China’s armed forces does not include the two companies, according to a report by StreetInsider citing Bloomberg.
What now
Many of China’s technology companies are targeted by the outgoing US government in its battle with Chinese leaders. But every capital investment contains risk, the reasons for which vary. International investments have some risks of their own.
These risks must be part of any purchase or sale decision. In an interview today with CNBC, renowned investor Bill Miller said the recent fall in Alibaba is a buying opportunity. Although this type of macro news moves stocks, long-term investors should focus on the business itself and be sure to scale any investment according to the inherent risks.