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U.S. investors wonder if China Inc. is still worth the risk following a growing series of regulatory crackdowns that wiped out some $ 400 billion in the value of Chinese companies listed in the United States.
Investors ranging from Orange County Employees Retirement System pension fund in California to fund manager William Blair & Co. are rethinking their portfolios following Beijing’s decision last week to restrict operations of China’s for-profit tutoring industry as well than its ongoing campaign to curb tech companies. . These moves fueled large declines across all sectors of Chinese equity markets and hit Asian-focused funds in the United States.
The retreat of investors sent US certificates of deposit of tutoring firm TAL Education Group plummeting by about 70% in a matter of days to $ 6.19 on Friday morning. TAL traded above $ 90 in February. U.S. Certificates of Deposit, or ADRs, are certificates issued to U.S. investors that represent a specified number of shares of a foreign company.
New Oriental Education & Technology Group Inc. has fallen about 66% since July 22 and was at $ 2.24 on Friday morning.
It was the latest in a regulatory crackdown that hit the value of Chinese companies as important as Tencent Holdings Ltd., even as U.S. indexes hit record highs. Previous regulatory moves that rocked companies such as Alibaba Group Holding Ltd., its unlisted sister company Ant Group Co. and Didi Global Inc., which plans to go privatized again to appease the authorities, had already sparked the concern of Western investors.
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