Investment Strategies
US Investment Titan Gets Cold Feet Over China – Report

A long-running investor into China has taken time out to reassess what's going on in the country following President's Xi's re-election at the recent party congress.
Tiger
Global Management, which oversees $125 billion in assets, is
pausing its investments in Chinese equities because the firm is
assessing whether putting money into the Asian country is wise
after President Xi Jinping consolidated his power, according to
the Wall Street Journal. The paper quoted unnamed
sources.
Tiger executives, including founder Charles “Chase” Coleman, have
told others that Xi’s re-election and his stacking the Communist
Party’s leadership with loyalists at the recent party Congress
could increase geopolitical tensions and meaning that the
country’s zero-Covid policy is likely to continue, the people are
quoted as saying.
The Chinese economy has been hit by Beijing’s zero-Covid policy
and last year’s clampdown on a number of sectors, including
technology and areas such as for-profit/after-hours schooling.
The real estate sector is a worry – given its share of GDP –
because of heavy debt exposures, as shown by
the default of property developer Evergrande, for example.
Beijing’s oft-stated desire to re-take Taiwan, its security
crackdown on Hong Kong, alleged mass theft of intellectual
property and encroachments into the South China Sea have also put
it at odds with the West. President Joe Biden’s administration
has also restricted exports of silicon chip tech to China.
Another worry is that in the longer term, China faces a declining
population problem as the consequences of the now-defunct “One
Child” policy are being realised.
The MSCI China Index has slumped by 40.7 per cent since the start
of January (in dollars); the MSCI Overseas China Index (in
dollars) has crashed by 36 per cent.
The WSJ said that Tiger has reduced its hedge fund’s
China exposure to the mid-single digits heading into the Chinese
Communist Party’s recent congress. As a result, Tiger was able to
avoid some of the market fallout following Xi’s
re-election. The firm didn’t buy into the steep selloff.
Other US investment houses continue to push into China,
notwithstanding concerns. Last September, for example,
BlackRock raised
about $1 billion for the first-ever mutual fund solely run by
a foreign firm which is allowed to sell to Chinese
individuals. Fidelity International was granted preliminary
approval in August 2021.
George Soros, the famed hedge fund tycoon, last year wrote in the WSJ that BlackRock’s push into the Chinese market was a “tragic mistake.”