A prominent Australian fund manager overseeing investments worth more than $ 5 billion said he had completely sold Chinese stocks and would not reinvest in the country until the ruling Communist Party clarified regulatory repression against its main companies.
Melbourne-based Munro Partners had previously invested up to 15% of its portfolio, or $ 750 million, in Chinese stocks, including stakes in tech giants Tencent and Alibaba. But chief investment officer Nick Griffin said the company’s stakes in all Chinese companies were divested in the first half of this year due to increased investment risks.
“We’ve been a huge fan of the Chinese opportunity for years. We think this is a great opportunity, we would love to come back. But as far as we’re concerned, the lines have been crossed and we won’t be coming back until we see something suggesting the capital will be taken care of, ”Griffin said.
“We are concerned about the government’s overbreadth, we are concerned about how our capital will be treated, we are concerned about the rule of law, and we have no investment in China today.”
The Chinese government has embarked on a major crackdown on its local businesses, starting with a ban on Ant Group’s initial public offering last November and expanding into the tech and education sectors, with more new rules that require companies to submit to security audits or ban foreign capital.
“The education sector went from a for-profit sector to a non-profit sector in the space of a weekend. These businesses fell 90% in three days. They weren’t small businesses, $ 30 billion to $ 40 billion businesses that almost fell to zero in one weekend, “Griffin said.
“At the end of the day, we manage our customers’ money. Our job is to find great opportunities and balance the odds of risk and reward. It’s very difficult for us to assess the likelihood of risks here.
Investors are divided over the merits of investing in Chinese stocks, with HSBC chief executive Cecilia Chan recently predicting that short-term volatility will lead to long-term growth, while Bell asset manager Ned Bell claims the risks outweighed the benefits.