Veteran emerging markets investor Mark Mobius said investors should “be very, very careful investing in China,” after in trouble to get his money out of the country.
Mobius, founder of Mobius Capital Partners, was a long time reminder Chinese stocks, but revealed why he changed his mind in an interview with fox business THURSDAY.
The investor revealed that he had funds trapped in an account at HSBC in Shanghai. “I can’t get my money out. The government is restricting the flow of money out of the country,” he said.
Mobius went on to say that the Chinese government was “putting all kinds of barriers” in its path. “They don’t say, ‘No, you can’t withdraw your money’, but they say, ‘Give us all the 20-year records of how you earned that money,’ and so on. It’s crazy.”
In China, individuals and businesses attempting to transfer money out of the country must comply with policies and restrictions set by regulators such as the State Administration of Foreign Exchange (SAFE), which governs the foreign exchange market. Chinese.
These restrictions differ from more open economies where money can flow in and out freely, such as the United States or Hong Kong, the semi-autonomous Chinese city.
On fox business, Mobius said his team invests in China through Hong Kong, which Mobius called “little bit more open” than China. The city allows foreign investors to invest in Chinese stocks and bonds through local financial institutions.
Foreign companies and investors have soured on the Chinese economy throughout 2022, following an official crackdown on large private sector companies and economic damage caused by strict COVID-zero policies, resulting in monthly capital outflows of billions of dollars as investors dumped bonds and stocks.
Still, China’s rapid reopening is encouraging analysts to give more upbeat forecasts for both China’s economy and its stock markets. End of February, Goldman Sachs estimates that Chinese stocks could rise by up to 24% by the end of the year, as sentiments shift “from reopening to recovery”.
Such renewed optimism is far from universal, however.
On Sunday, China said it would target 5% GDP growth for 2023, lower than economists expected.
And earlier this month, the American Chamber of Commerce in China reported that only 45% of the more than 300 companies surveyed between October and November 2022 considered China one of the “top three” investment destinations, compared to 60% a year earlier.
Mobius on Thursday warned that Chinese officials were trying to exercise greater surveillance of Chinese private companies, including through “gold stocksor registered shares purchased by government-affiliated entities for board representation and veto rights.
“I don’t think it’s a very good picture to see the government becoming more and more focused on controlling the economy,” Mobius said.
mobius suggested that he was now considering other possible investment destinations, in particular India. ” You have a billion people, they can do the same as the Chinese. They can do the same type of manufacturing and so on,” Mobius said.
Manufacturers are considering moving production out of China, in part due to concerns over heightened tensions between Beijing and Washington. Before the weekend, Apple supplier Foxconn would have agreed to invest $700 million in a new Indian factory in Karnataka.
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