According to global fund managers, unpredictable behavior of China’s regulators make investing in China unappealing to foreign investors in the short-term. If Beijing were to make more meaningful reforms on data protection and reduce monopolistic practices by state-controlled companies will make investment in the country more attractive in the long-term.
“I think investors just don’t like the uncertainty of not knowing what’s the next shoe to drop,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.
Haefele, who runs investment strategy for the world’s largest wealth manager with $3.2 trillion in assets under management, said it was still early days and he would wait to see “how long this plays out.”
“Foreign investors will be “absolutely” circumspect about increasing their investments in China in the short term,” said Yicheng Zhang, CEO of Chinese private equity firm CITIC Capital.
While China’s regulatory moves were expected with Beijing shifting focus to “common prosperity,” specific tactics used by regulators caught investors by surprise and have caused shockwaves, said Hong Kong-based Zhang, who manages $36 billion in assets under management.
“Fundamentally, it surprised me as well, turning some of these companies overnight into not-for-profit entities,” said Zhang while adding, foreign investors’ concerns about these measures’ lack of respect for property rights was understandable.