The China Fund, Inc. (CHN)
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The financials of the Chinese companies are whatever the Chinese Communist Party wants them to be. They do not allow outside third-party audits. There is no verification of anything. The Chinese intervention began with DiDi, spread to the tech companies, enlarged to the educational sector, and then found its way into the gaming companies.
China is the second largest economy on the planet with more economic growth and disruption than anywhere else. Over recent years, Chinese companies have increasingly chosen to access the capital markets by issuing convertibles.
NEW YORK, Sept. 10, 2021 /PRNewswire/ -- The China Fund, Inc. (NYSE: CHN) today announced its financial results for its third fiscal quarter ended July 31, 2021.
Shares in China continue to post sharp year-to-date losses vs. an otherwise upside bias for global stocks, based on a set of exchange-traded funds tracking the world's major equity regions through yesterday's close (Aug. 25). Some investors see opportunity in beaten-down shares, but there's still a wide-ranging debate as the market prices in higher uncertainty driven by the vagaries of Beijing's evolving policy agenda.
China's tech stocks slumped to new lows on Friday and Hong Kong's benchmark index hit a 10-month low as an unrelenting series of Chinese regulatory crackdowns crushed international investors. Further, China announced tougher rules on competition in the tech sector again, and they also summoned executives at several property developers warning them to reduce their debt significantly. The Chinese media also reported looming regulations for a new sector - liquor makers.
The rapidly evolving regulatory landscape in China has persistently populated financial market headlines this summer. The cost of raising a larger family can be daunting, particularly as it relates to the “three mountains” of costs associated with childcare – education, healthcare, and housing.
For income investors, closed-end funds remain an attractive investment class that covers a variety of asset classes and promise high distributions and reasonable total returns.
Since I started going to China 36 years ago, I have found that most Western observers who do not have direct contact with policymakers and don't follow in detail the patterns of the changes have tended to not believe that the Chinese Communist Party's usage of capital markets to foster development is real. In the case of the educational tutoring companies, they want to reduce the educational inequality and the financial burden on those who are desperate to have their children have these services but can't afford them by making them broadly available.
The momentum behind investor interest in ESG and sustainable assets shows no sign of abating in 2021. China has grown exponentially into the world's second-largest economy in the past 40 years.
Flows into China-focused ETFs are surging as investors position for China's growing economic and financial strength. Non-Chinese investors are generally overlooking China's growing influence on the global economy and in capital markets.