In 2021, Chinese stocks that trade on overseas exchanges underperformed onshore shares by a wide margin. Global investors were spooked by President Xi Jinping’s move to tighten regulations on industries such as internet companies, online tutoring providers, and property developers. In China, however, a lot of fund managers see things differently. They say the selloff was an overreaction, although some concede that Beijing acted clumsily. We talked to 10 money managers, most of whom manage long-only funds that invest in Chinese equities, to find out what they think the world may be missing. Their responses have been condensed and edited for clarity.
It’s wrong to view the recent regulatory crackdown on e-commerce giants, efforts to deleverage the property sector, and the push for “ common prosperity” as an assault on the private sector. Rather, it is a pivotal long-term state strategy devised to help the economy grow further by narrowing its wealth gap and avoiding the middle-income trap.
