Tencent, Alibaba and Baidu will reward patient investors who stay with them through the headwinds

2018-10-07 12:27:58      View:

Oliver Cox says China's tech sector has taken a beating of late and some of its giants are in a transition process, but a look at the quality of the work these companies do should encourage investors to stick around .

The problem facing investors, bombarded by a huge amount of information every day, is that "doing nothing" is actually quite hard.

The Chinese technology sector, comprised of both internet and gaming companies as well as hardware and component manufacturers, serves as a classic example of a sector whose shiny long-term prospects are in conflict with some admittedly challenging short-term headwinds.

Investors could be understandably tempted to abandon the sector, but a thoughtful long-term holding strategy of simply sitting still may be more prudent.

Although they have suffered a tide of negative short-term sentiment and resulting price weakness, fundamentally, nothing has significantly changed in the past six months for Tencent, Alibaba and Baidu.

Tweaks to government regulation of the gaming sector affecting Tencent, for example, or the management transition currently underway at the top of Alibaba, are unlikely to have any long-term impact on either company.

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