These things are good as a cigar butt value play but can’t be a long term investment simply because the banking system in China is way different from what you see in the West. In China, most banking is state owned and regulated and these companies are allowed to operate on a small scale until they don’t become a major part of overall credit. As we saw with AliPay and Jack Ma these lending businesses are heavily vulnerable to government regulation and any government regulation is enough to crash the value by 90% or even 100% to 0. The dynamics of investing in China are completely different from what you see in the West and thus you have to adapt accordingly and invest in things and areas which the government is likely to encourage and/or even aid in developing and the microfinance consumer credit industry is not one of them.
These things are good as a cigar butt value play but can’t be a long term investment simply because the banking system in China is way different from what you see in the West. In China, most banking is state owned and regulated and these companies are allowed to operate on a small scale until they don’t become a major part of overall credit. As we saw with AliPay and Jack Ma these lending businesses are heavily vulnerable to government regulation and any government regulation is enough to crash the value by 90% or even 100% to 0. The dynamics of investing in China are completely different from what you see in the West and thus you have to adapt accordingly and invest in things and areas which the government is likely to encourage and/or even aid in developing and the microfinance consumer credit industry is not one of them.
Looks like it 6xed from it's 2022 lows. Nice write-up!