Due to the unpredictability and rigidity of the actions of the Chinese authorities, more than one promising Chinese company has suffered.
Here, the economic benefits of individual companies (and even entire sectors) are not taken into account, and even more so — with the interests of investors.
A recent example: the education services sector. The authorities planned to transfer educational companies to non-profit ones and prohibit attracting private capital. As a result, in the summer, New Oriental Education shares fell by 87% in 2 days, TAL Education shares — by 70% in a day.
And more recently, China announced restrictions for gambling.
To protect against the risks of investing in individual companies, it is safer to invest in China through ETF funds (Exchange Traded Funds). These are investment funds with securities of many companies at once.
Funds can be industry-specific, country-specific, developed and emerging markets, etc. By themselves, they do not provide security guarantees, but they allow you to distribute funds to different stocks, reducing the risk of problems for individual companies. Shares of such funds can be bought on the stock exchange.
Specifically, it is best to invest in China through funds on the broad market (when the fund has securities of companies from different industries), and not through industry. Yes, this method will reduce the profitability compared to the purchase of individual shares, but at the same time it will reduce the above risks.