Muddy Waters' Carson Block Warns Against Chinese Stocks Despite Recent Market Surge: Report

American investor and the founder of Muddy Waters Research, Carson Block, is snubbing China’s current stock market rally, citing unreliability in corporate accounting and geopolitical risks.

Block voiced to Bloomberg his aversion to Chinese stocks for 15 years due to the lack of credibility of accounting, especially the ones listed outside of China.

Chinese e-commerce juggernaut Alibaba Group Holding (NYSE:BABA), considered a tech barometer of China, has gained over 51% in the last six months, buoyed by China’s stimulus measures and as the company’s artificial intelligence models gained traction.

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Block’s firm became popular after exposing fraud at some Chinese companies. Last October, Block warned investors about buying local stocks.

The MSCI China Index has gained about 10% since October as President Xi Jinping’s unleashed stimulus measure to boost the private sector with additional optimism from DeepSeek’s artificial intelligence capabilities, offset by U.S. President Donald Trump’s tariff threats and risk of a potential military conflict between China and Taiwan, Bloomberg wrote.

Meanwhile, Appaloosa Management’s David Tepper boosted his exposure to China-related stocks and exchange-traded funds (ETFs) last quarter. In the fourth quarter of 2024,

Tepper raised his stake in companies, including JD.com Inc (NASDAQ:JD), Alibaba Group, and PDD Holdings (NASDAQ:PDD).

JD.com gained 32% in the last six months. Chinese EV companies Nio Inc (NYSE:NIO) and Li Auto Inc (NASDAQ:LI) gained over 7-19%. Xpeng Inc (NYSE:XPEV) surged 143%, which was backed by the successful launch of new models, notably the XPeng MONA M03.

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Photo by Tatiana Popova and rawf8 via Shuttterstock