[Epoch Times August 20, 2021](Epoch Times reporter Cheng Mulan reported) The Nasdaq Golden Dragon China Index, which tracks China’s concept stocks, plummeted again on the 19th, closing down 5.14% at the end of the day. On the 17th, the Chinese Communist Party again took action to suppress Xinchuang Technology Company, and announced that it would solicit public opinions on the prohibition of unfair competition on the Internet. Investors who originally took advantage of the bargain to buy China concept stocks also lost confidence and began to sell Chinese stocks.
According to Bloomberg statistics, the price of KraneShares Fund (KWEB), which mainly invests in Chinese Internet stocks, has fallen by 60% from its peak in mid-February. This index stock fund (ETF) has assets of US$4.9 billion.
During this severe decline in Chinese technology stocks, many investors entered the market and took over. As of last week, KWEB set a record of 5 consecutive weeks of net inflow of funds, and there was also a record high in single-day net inflow in July. However, the data on August 19 showed that this ETF has been outflows for three consecutive days.
Matt Maley, chief market strategist at Miller Tabak + Co, predicts that China concept stocks will get worse in the future.
Bloomberg analyst Eric Balchunas said that due to the continuous fermentation of the uncertainty of the Chinese Communist Party’s regulatory policies, buyers who entered the market on dips have yet to rebound and they have begun to lose confidence.
In addition, fund managers who were optimistic about the Chinese market have begun to divest, such as the flagship Ark Innovation ETF of “female stock god” Wood (Cathie Wood), in which the proportion of equity shares has dropped from 8% in February to zero, making ETF investors confident More shaken.
In addition, according to public documents of the United States Securities and Exchange Commission (SEC), the hedge fund Marshall Wace, which manages US$59 billion in assets, released the ADR (American Depositary Receipt) of Chinese companies such as Tencent Music Entertainment, iQiyi and Baidu in the second quarter; The Ross Fund Management Company also cleared China’s concept stocks in the second quarter, including shares of Tencent Music, iQiyi, Baidu and Vipshop; funds under Soroban Capital Partners cleared 2.06 million Alibaba stocks last quarter.
Marshall Wace co-founder Paul Marshall wrote in a letter to clients last week: US-listed Chinese concept stocks have “no investment value.”
SEC Chairman Gary Gensler issued the most direct warning so far on the risks of investing in Chinese companies on the 16th, requiring SEC personnel to suspend the review of Chinese companies’ initial public offerings (IPOs) listed in the United States under the VIE (Variable Interest Entity) structure. .
Bloomberg reported that the Nasdaq Golden Dragon China Index, which tracks 98 U.S. listed Chinese stocks, has plummeted by 50% in the six months since its peak in February, and its market value has evaporated by about US$900 billion.
In contrast, buying U.S. stocks on dips this year has achieved good returns. The Invesco Nasdaq 100 ETF, which tracks US technology stocks, has risen 17.7% this year.
Since July, the Chinese Communist Party’s regulatory agencies have intensively suppressed Chinese technology giants and the education and training industry, causing stock turbulence and spreading overseas investors. Investors worry that this round of suppression has only begun, and it is far from over.
Editor in charge: Li Muen
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