Should You Stop Investing in China? - Evergrande, VIEs and other Chinese Risks

A regulatory crackdown and ideological campaign by the Chinese government has upended the Chinese stock market, which comprises close to 40% of emerging market indices. We evaluate what is going on and what investors should do. Topics covered include:How has the Chinese stock market performed in 2021Why has Cathie Wood and Ark Invest dramatically cut their Chinese stock exposureWhat are examples of regulatory changes in ChinaWhy the stocks of Chinese online tutoring companies that trade on the New York Stock Exchange fell 90% this yearWhat are variable interest entities (VIEs) and why they are a risky corporate structure for Chinese companiesHow a high private sector debt burden could lead to a banking crisis or contagion in ChinaWhat are ways investors can invest in emerging markets while having a smaller allocation to China Thanks to LinkedIn and Simplify ETFs for sponsoring the episode. For more information on this episode click here. Show Notes Cathie Wood’s Ark cuts China positions ‘dramatically’ by Leo Lewis and Thomas Hale—Financial Times Beijing to break up Ant’s Alipay and force creation of separate loans app by Sun Yu and Ryan McMorrow—Financial Times China’s dodgy-debt double act—The Economist China’s bid to stabilise its property market is causing jitters—The Economist Related Episodes 218: Is China or the U.S. More Vulnerable? 249: Should You Invest in India? 328: Are You Underweight Chinese Stocks? Pros and Cons of Investing in China See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.