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Cramer: Stay Away From China IPOs Like Didi

Jim Cramer writes that as long as the Chinese government can remove an app from stores, there's no point in investing in an IPO in China.

Investment is supposed to be about finance. When you buy stocks, they’re supposed to rise and fall based on the fortunes of the underlying company or the market at large. Which is why it’s so frustrating when politics steps in to mess up your portfolio. In his Real Money column, Jim Cramer warns of the risks of Chinese IPOs.

"Let Didi  (DIDI) - Get DiDi Global Inc. Report be the last straw. For years now I have been railing against Chinese IPOs, saying that you should steer clear of them at all cost," Cramer wrote.

"This Didi fiasco makes that clear for certain. There is no way that you can ever invest in a Chinese IPO no matter how good if it can be trashed by the Chinese government just a few days after coming public."

Didi is a ride sharing company that operates in China. The company has already been part of longstanding concerns about how China rigs its market in favor of domestic companies. (Uber,  (UBER) - Get Uber Technologies, Inc. Report for example, famously “exited” the Chinese market in favor of Didi two years ago.) Now, just days after listing its IPO and raising millions from U.S. investors, Chinese authorities ordered Didi removed from domestic app stores.

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Cramer also wrote:

"The viciousness of what happened here is extraordinary. We now know that the company had a good inkling that the government was about to hammer it. But it either communicated that to the investors or didn't. We can't know for sure. We also do not know if the bankers knew. We probably will have no idea if that's the case unless the SEC decides to investigate and tells all companies and American investors to retain all documents and get ready for a nightmare of an inquiry. Should be full-stop on the Chinese deals."

Read more of what Cramer has to say about Didi, and which IPOs he thinks have the potential for real growth, over on Real Money.

Whatever is happening behind the scenes in Didi, and investors may never know the full story, the odds are that this transaction would have been illegal in the U.S. Which is what makes it so difficult for investors to swallow.