Ark Investment Management Co., Ltd. update
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Casey Wood, CEO of Ark Invest and one of the world’s most watched investors, said that her fund has drastically reduced its exposure to China, leaving only a few portfolios of companies that clearly “please” Beijing.
She told a group of institutional fund managers on Thursday that Ark’s strategic shift was due to China’s environment “completely different” from the environment in which many global asset managers put their funds at the end of last year.
She said that the Chinese authorities are now focusing on social issues and social engineering at the expense of the capital market. Anything that Beijing considers too profitable has now been hit by a torpedo.
The founder of Ark cited a series of catalysts as catalysts Numb regulatory changes In July, the Chinese government imposed compulsory measures on China’s online education industry within a weekend. She said that the government’s move shows that its pursuit of “common prosperity” has become its common concern.
The education directive banned for-profit companies from teaching school subjects, effectively eliminating the country’s multi-billion-dollar listing tutoring industry overnight.These measures are a Broader strike In the fields of technology, entertainment and games.
“We did not cancel our position, but we have significantly reduced our position in China. We have replaced some of the losers with companies that we know are courting the government and prosper together,” Wood said.
Ark has now substantially integrated the investment portfolio of Chinese companies seeking the favor of the government, including JD Logistics. Wood said that JD Logistics is building infrastructure in third- and fourth-tier cities with a very low gross profit margin.
Wood also mentioned the e-commerce platform Pinduoduo, which she said is investing heavily in the grocery industry and the supply chain between farms and shops. “I think it’s basically free investment to help the government,” she said, adding that certain companies now seem to be specifically “to please the government.”
Wood’s comments during the Mizuho Securities Investor Conference run counter to the global investor debate on whether Chinese President Xi Jinping’s unpredictable regulatory risks make certain sectors of the world’s second-largest economy’s stock market practically non-investable. Hang on them.
Beijing’s recent intervention has dealt a particularly severe blow to Chinese companies listed on the US stock market, including tuition companies and ride-hailing group Didi, whose stock prices plummeted after regulators launched an investigation into their data security shortly after their IPO.
Wood argued that despite Ark’s recent portfolio restructuring, she does not believe that China wants to isolate or stop growth from the rest of the world, but is experiencing a “reset”.
“We think that over time, they will reconsider some of these regulations, and we will not abandon China because they are so focused on innovation and are naturally entrepreneurial,” she said.
BlackRock said this week that its first mutual fund in China attracted $1 billion in funding and was approved this year. The financier George Soros criticized the move in the Wall Street Journal, calling it a “tragic error.”
In recent years, China has taken measures to liberalize its large and strictly controlled capital market, allowing foreign companies to fully own their mutual fund and securities business.
Large international companies that already hold large amounts of Chinese stocks have sought to enter the emerging asset management industry, and BlackRock said this week that its recently approved domestic business has brought 110,000 customers to its first fund.