(Bloomberg) — Ark Investment Management LLC’s founder Cathie Wood said the money manager is holding off on adding bets in Chinese markets amid concerns about Beijing’s crackdown on some of the country’s high-profile tycoons.
China remains a “very innovative nation” but there are concerns that the recent regulatory assault on private enterprise has led to an erosion of incentives for dynamic entrepreneurs, Wood said at a webinar organized by Bloomberg Intelligence and moderated by Rebecca Sin.
“We don’t think it’s true that China is uninvestable. We’re just waiting for the valuation dust to settle and make sure the incentives for growth re-emerge,” Wood said.
Wood’s caution stands in contrast to a return of optimism about Chinese stocks among some of the world’s leading investment banks and investors in recent weeks, with cheap valuations and receding fear of regulation cited as reasons.
Over the past year, Beijing has escalated a campaign targeting some of the country’s once high-flying industries from Big Tech to private education that are perceived to threaten financial stability or data security, hurdles to President Xi Jinping’s effort to remake the world’s No. 2 economy and achieve so-called “common prosperity”.
The clampdown has contributed to an underperformance by Chinese stocks: The MSCI China Index is down 17% this year, compared with a 16% gain for the MSCI All-Country World Index and a 25% jump for the S&P 500.
Other things Wood said:
- El Salvador’s Bitcoin experiment is “very exciting” and a real use case for the cryptocurrency
- On Elon Musk and Tesla Inc.: “Tesla wants to save us from ourselves – wants to save humanity. Elon Musk is so convinced that we need to change our ways in terms of transportation and the environment that he’s dedicated his life to it.”
- The Global Industry Classification Standard or GICS system jointly developed by MSCI and S&P Dow Jones Indices will need to change dramatically in the coming years because technology is permeating every industry
- “Pure” Bitcoin exchange-traded funds are likely better than futures-based ones
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