Cramer says it is impossible to recommend Chinese shares in a hostile communist regime

CNBC’s Jim Cramer said on Wednesday that he can not recommend investors to buy Chinese shares because the communist government there is a “total wild card”.

Chinese President Xi Jinping “does not like capitalism,” Cramer told the “Squawk Box,” saying the leader of the world’s second-largest economy “may be the first totalitarian dictator in a long time.”

Cramer’s comments came as two well-known US investors sent mixed signals on Chinese stocks.

Charlie Munger’s media and investment firm Daily Journal Corporation nearly doubled its stake in Chinese e-commerce giant Alibaba, according to a law enactment on Tuesday. Munger, who turned 98 on New Year’s Day, is also Warren Buffett’s longtime investment partner.

Meanwhile, DoubleLine founder Jeffrey Gundlach told Yahoo Finance this week that “China is uninvestable, in my opinion, at this point.” The so-called bond king said he has never invested in China. “I do not trust the data. I no longer trust the relationship between the United States and China. I think investment in China can be confiscated. I think there is a risk to that.”

Cramer agrees with Gundlach and says it is “impossible” to think about investing in shares of Chinese companies on such an uncertain background in China that – even if there is a good argument for buying them.

“There’s a sense that the middle class will do better in China,” Cramer said. “Alibaba will do well. JD will do well. Baidu could do well. But that does not mean their shares can be traded to do well.”

These three Chinese companies are listed on US stock exchanges. However, that may change due to increasing political pressure in the US and China. In fact, the Chinese app Didi announced in December that it would delist from the New York Stock Exchange and pursue a listing in Hong Kong. Didi had been published less than six months earlier.

China has implemented a month-long regulatory effort aimed broadly at its internet giants, and it has enacted legislation ranging from anti-monopoly measures to data security. The movements have sent investors on the move and wiped out billions of dollars in value from China’s technological titans.

Cramer said the United States is trying to avoid a “very bad cold war” with China. “I think President Xi has utter contempt for us, utter contempt for shareholders and much contempt for rich people who he believes threaten his power.”

“Charlie Munger is a genius investor,” Cramer said. “But I just can not do that,” he stressed, reiterating his position that Chinese stocks should be avoided.

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