The latest policy decree from Beijing is a likely death sentence for the for-profit education sector in China … but it may be a win for Chinese society. Global investors are sometimes uncomfortable with China’s interventionist approach to address social issues. But if they want to invest successfully in Chinese companies, they’d better understand it.
Is this the end of the road for Chinese ADRs? China may be tightening the VIE loophole that previously permitted U.S. listings of Chinese companies. This article explains why ADRs and VIEs present an especially complicated issue for regulators in China.
Much has happened this week in the Chinese tech and ADR space. Here are my thoughts in response to some of the questions I’ve been receiving from investors and others.
I’ve been getting questions about the Ant Financial IPO, and it was validating to see Charlie Munger’s recent interview on the topic. The brief article below shares my thoughts on the topic, and on China’s regulatory approach more generally.
Jason Hsu and I have been monitoring the unprecedented rush of Chinese companies to list on U.S. exchanges. Our key takeaway? Many of the highest-quality Chinese firms are and will continue to be listed exclusively in mainland China.
Given some of the alarmist coverage around the slowing loan activity in China, it’s no surprise that investors are curious. The change in policy will likely have an effect on the Chinese equities market, but the impact may be different than many suspect.
Global equities plunged during the early days of COVID-19, only to rebound through the rest of the year, hitting new highs on the back of a surge in retail trading. Reflecting this bullish market trend, unprofitable U.S. tech firms have seen their shares skyrocket into the start of 2021. In this data insight, we compare China’s infamous 2015 market bubble which followed a similar pattern.
In this research note, Dr. Phil Wool reviews some of the history behind China’s asset management industry. The results shed light on the sources of mutual fund outperformance in China and demonstrate the value of active management in a market dominated by retail investors.
Most people prefer to understand Chinese regulators through the lens of communism vs. capitalism or a one-party system versus a multi-party democracy. However the more useful (and certainly the most simple) analogy is likely the “tiger-mom” vs. Montessori framework for parenting.
Last November, the Trump administration announced a ban on US investors holding Chinese stocks with suspected military links. Despite some big names falling on the US government’s blacklist, the contribution from banned stocks total less than 3% of the overall weight in the average China investor’s portfolio.