6/22/2023 0 Comments Shift technologies investorsAs a result, many pension funds and other large institutions have stopped buying China altogether. Those returns are out of reach because of the country’s economic doldrums and anemic corporate profits. The bottom line for many foreign fund managers is that the risk of investing in Chinese securities has soared over the past year and the returns have not kept up. More IPOs have been launched in those markets over the past year than in any other market-but with less long-term, foreign capital to offset the share-price volatility that comes from China’s army of retail investors. Instead, the government is making it easier for these companies to list in Shanghai and Shenzhen. China’s bureaucrats are concerned about exposing secrets supposedly contained in the vast troves of data controlled by companies seeking IPOs. Meanwhile, Beijing has been undertaking its own form of de-risking by imposing strict regulations that have choked off the number of Chinese companies launching initial public offerings (IPOs) in the US. Western manufacturers are also taking first steps to leave the country, or at least to implement “China+1” strategies. Now the Biden administration is preparing to restrict the flow of US venture capital and private equity to Chinese startups developing sensitive technologies-a step many investors worry is a harbinger of more sanctions to come. Even though China doesn’t need foreign capital like it did a generation ago, foreigners’ reluctance to invest will reverberate through the economy over time.įund managers-especially those with investment strategies focused on the long-term-are concerned about the political uncertainty created by Beijing’s regulatory crackdown on leading private sector conglomerates and heavy-handed pressure on Western companies. All this adds up to a difficult straits in which local governments and many companies can’t pay their bills. China’s economy has failed to rebound as expected from Zero-Covid policies, and it faces profound structural challenges: A rapidly aging workforce and slow productivity growth widening income inequality and a crippling property crisis.
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