The Analyst Who Called The Sell-Off Of Alibaba, JD Now Has This To Say About Chinese Stocks

China stocks are in doldrums, dragged down by the double whammy of economic softness and regulatory woes.

An analyst who was fairly accurate with his predictions for high-profile tech stocks last year reportedly said the sell-off may not have stalled.

There is further pain ahead for Chinese stocks as the twin risks remain and continue to ward off global investors, according to Manuel Muehl, an analyst at Frankfurt-based DZ Bank AG, Bloomberg reports.

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The prediction becomes all the more important as Muehl was among the very few analysts who issued a bearish call on the Chinese tech sector in July 2021, Bloomberg indicated. The report also noted that Muehl's calls on Alibaba Group Holdings, Inc. BABA and JD.com, Inc. JD have been more accurate than any of the other analysts over the past year.

"No one knows what the real risk premium for Chinese equities is right now because the market is still in a price-finding process," the analyst was quoted as saying.

Apart from the regulatory overhang, the Chinese real estate bubble and the COVID lockdowns in many cities are all serving to sap consumer confident, the analyst said. There is limited scope for upside to company fundamentals in the coming quarters, he added.

Photo: Courtesy of alibabagroup.com