Should You Stop Investing in China? - Evergrande, VIEs and other Chinese Risks
Money For the Rest of Us
J. David Stein
4.5 • 1.4K Ratings
🗓️ 15 September 2021
⏱️ 24 minutes
🧾️ Download transcript
Summary
A regulatory crackdown and ideological campaign by the Chinese government has upended the Chinese stock market, which comprises close to 40% of emerging market indices. We evaluate what is going on and what investors should do.
Topics covered include:
- How has the Chinese stock market performed in 2021
- Why has Cathie Wood and Ark Invest dramatically cut their Chinese stock exposure
- What are examples of regulatory changes in China
- Why the stocks of Chinese online tutoring companies that trade on the New York Stock Exchange fell 90% this year
- What are variable interest entities (VIEs) and why they are a risky corporate structure for Chinese companies
- How a high private sector debt burden could lead to a banking crisis or contagion in China
- What are ways investors can invest in emerging markets while having a smaller allocation to China
Thanks to LinkedIn and Simplify ETFs for sponsoring the episode.
For more information on this episode click here.
Show Notes
Cathie Wood’s Ark cuts China positions ‘dramatically’ by Leo Lewis and Thomas Hale—Financial Times
China’s dodgy-debt double act—The Economist
China’s bid to stabilise its property market is causing jitters—The Economist
Related Episodes
218: Is China or the U.S. More Vulnerable?
249: Should You Invest in India?
328: Are You Underweight Chinese Stocks? Pros and Cons of Investing in China
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Transcript
Click on a timestamp to play from that location
| 0:00.0 | Welcome to Money for the Rest of Us. |
| 0:02.8 | This is a personal finance show on Money. |
| 0:05.6 | How it works, how to invest it, and how to live without worrying about it. |
| 0:09.6 | I'm your host David Stein, today as Episode 358. |
| 0:13.6 | It's titled Should You Stop Investing in China? |
| 0:17.7 | Earlier this year, in Episode 328, an episode titled Are You Underweight Chinese Stocks, |
| 0:24.0 | The Pros and Cons of Investing in China, I shared a statistic that |
| 0:29.2 | China made up about 17% of the world's economy as measured by gross domestic product, |
| 0:37.2 | but only about 5% of the global stock market as measured by the MSCI All-Country World Index. |
| 0:44.4 | We can contrast that with the US. |
| 0:47.0 | Its economy comprises about 22% of the global economy, |
| 0:51.9 | but over 57% of the global stock market. |
| 0:56.4 | Since that episode, those differences have gotten wider, |
| 0:59.4 | because the US stock market is up double digits year-to-date, |
| 1:02.9 | whereas the MSCI China All-Share Index, which includes the shares listed in Hong Kong, |
| 1:09.2 | it includes domestic shares, the A shares, the B shares, |
| 1:13.2 | shares that are listed overseas, that index is down 8% year-to-date, |
| 1:19.6 | and the index of China's largest companies, the China 50, has lost 17%. |
| 1:26.1 | Year-to-date. |
| 1:28.1 | The A shares that trade on the local Chinese stock market on the mainland have gained 2.7% year-to-date. |
| 1:37.1 | In that episode, I listed out some of my reservations about investing in China. |
| 1:43.4 | The most significant one was political issues. |
... |
Please login to see the full transcript.
Disclaimer: The podcast and artwork embedded on this page are from J. David Stein, and are the property of its owner and not affiliated with or endorsed by Tapesearch.
Generated transcripts are the property of J. David Stein and are distributed freely under the Fair Use doctrine. Transcripts generated by Tapesearch are not guaranteed to be accurate.
Copyright © Tapesearch 2026.