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

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CNBC’s Jim Cramer said Wednesday that he could not recommend investors buy Chinese stocks because the communist government has a “total wild card” there.

Chinese President Xi Jinping “doesn’t like capitalism,” Cramer told Squawk Box, saying the leader of the world’s second largest economy was “possibly the first totalitarian dictator in a long time.”

Cramer’s comments came when two prominent US investors were sending mixed signals on Chinese stocks.

Charlie Munger’s media and investment firm, Daily Journal Corp., has nearly doubled its stake in Chinese e-commerce giant Alibaba, according to a regulatory approval filed Tuesday. Munger, who turned 98 on New Years Eve, is also Warren Buffett’s longtime investing partner.

Meanwhile, DoubleLine founder Jeffrey Gundlach told Yahoo Finance this week that “I don’t think China is investable right now.” The so-called bond king said he had never invested in China. “I don’t trust the data. I no longer trust the US-China relationship. I think investments in China could be confiscated. I think there is a risk.”

Cramer agrees with Gundlach, saying that it is “impossible” to invest in stocks in China against such an uncertain backdrop in China that – even if there is a good case for it – to buy it.

“There is a feeling that the middle class in China will be better off,” said Cramer. “Alibaba will do well. JD will do well. Baidu could do well.

These three Chinese companies are listed on US stock exchanges. However, this could change due to mounting political pressure in the US and China. In fact, Chinese ride-hailing app Didi announced in December that it would be exiting the New York Stock Exchange and pursuing a listing in Hong Kong. Didi had gone public less than six months earlier.

China has been cracking down on its internet giants for months, enacting laws ranging from antimonopoly measures to data security. The moves have shaken investors and wiped billions of dollars in value from China’s tech titans.

Cramer said the US was trying to avoid a “very bad cold war” with China. “I think President Xi totally despises us, totally despises shareholders, and deeply despises rich people who he believes threaten his power.”

“Charlie Munger is a brilliant investor,” said Cramer. “But I just can’t,” he said, reiterating his position that Chinese stocks should be avoided.

The Chinese embassy in Washington did not respond to a request for comment.

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