China investors call it quits as Xi, ‘zero COVID’ sap confidence

China investors call it quits as Xi, ‘zero COVID’ sap confidence

Taipei, Taiwan – For months, Singaporean investor Anndy Lian has been selling off Chinese stocks to reduce his portfolio’s exposure to the world’s second-largest economy.

Once a regular investor in Chinese tech companies, Lian now views  China as an increasingly risky bet as the country’s autocratic turn under Xi Jinping and ongoing “zero COVID” lockdowns cast a cloud over the economy.

“I started gradually lowering my exposure since last year as that was when the downward trend became obvious, but I’ve increasingly sold off my holdings this year as things have gotten worse,” Lian told Al Jazeera,

“The instability is my biggest concern as an investor. The overall environment in China is uncertain right now, and it goes way beyond the financial sector.”

Lian is among a growing number of international investors who are pulling back from China after years of record inflows.

Overseas investors shed more than $150bn in China-based yuan-denominated assets in the first quarter of this year, the largest decline on record. Chinese bonds alone saw a $61bn sell-off between February and May. Roughly $300bn could exit the country this year, more than double last year’s outflow of $129bn, according to forecasts by the Washington-based Institute of International Finance.

Overseas investors shed more than $150bn in China-based yuan-denominated assets in the first quarter of this year, the largest decline on record [File: Qilai Shen/Bloomberg]

China’s economy barely avoided contraction in the second quarter, expanding just 0.4 percent, a dramatic decline from 4.8 percent growth during the first quarter.

Lian said the effects of last year’s crackdown on the tech sector, which decimated the stock prices of major players such as Alibaba, Tencent and Didi, are still being felt.

In one of the most prominent episodes of China’s “techlash”, ride-hailing app Didi lost 80 percent of its market cap – more than $60bn in value – within a year of going public after Chinese regulators accused the firm of violating data security rules. Facing mounting scrutiny at home, Didi delisted itself from the New York Stock Exchange last month.

“Chinese tech companies may be great performers, but they need to be in the best possible environment to achieve the best returns,” Lian said.

“If you look at the tech crackdown last year, and how the value of a whole company like Didi can be virtually wiped out, it makes you nervous.”

Ride-hailing app Didi lost 80 percent of its market cap after Chinese regulators accused the firm of violating data security rules

Other investors, though, see room to adapt to Beijing’s tightening grip on the economy.

“Investors understand what the goals of the tech crackdown were, taking aim at inequality and related social issues, so I think that makes the sector still very investible,” Ker Gibbs, former president of AmCham Shanghai and a veteran China investor, told Al Jazeera.

“There’s always policy risk in China, and regulation moves much faster than in the US. That is something people must be accustomed to.”

Nonetheless, Gibbs said the lingering uncertainty around the Chinese economy has been a significant concern.

“For me, it’s all about the uncertainty of the lockdowns and zero-COVID and not knowing when it will all end,” he said. “Investors just can’t see where it’s headed. People don’t know what environment they’re in now.”

Beijing has given mixed signals to investors about what to expect.

While Chinese officials have promised to tweak pandemic restrictions for the sake of the economy, Xi has repeatedly ruled out shifting from “zero COVID” to living with the virus.

China has opened up new offerings of asset classes to foreign investors but also stepped up supervision of institutional investors in the country.

This month, authorities announced the launch of Swap Connect, a mechanism to allow overseas investors to participate in mainland China’s financial derivatives market.

Meanwhile, more than 80 Shanghai- and Shenzen-listed exchange-traded funds will be made available to investors in Hong Kong. Beijing has also announced it will substantially raise its currency swap with the territory to new levels to provide extra liquidity for the offshore yuan.

“There is a dramatic opening of China’s securities, insurance broking, and wealth management markets going on,” Duncan Clark, founder of Beijing-based investment advisory firm BDA, told Al Jazeera.

“The transition isn’t going to be easy, though, from N-shares [shares of Chinese companies listed in New York] to onshore Chinese listings or even Hong Kong listings. Investor confidence is shaken and Chinese issuers can’t meet face to face,” Clark added.

Lian said Swap Connect is unlikely to turn the tide of investors exiting the Chinese market.

“On the one hand, it may help attract new investors to China, but I doubt it will do much to retain those who are already moving away, and that is a bigger issue,” he said.

“It will take time to turn the tide. There will probably be a two or three-year trial phase until they get the settings right. Another question investors will ask is ‘How do we exit?’ Can they be assured they can withdraw their stock when they wish? We will have to see what the final details are when it comes out.”

Even as Beijing courts more foreign investors, it is also seeking to monitor them more closely. Last month, the China Securities Regulatory Commission formally issued guidelines mandating the establishment of communist party cells within global hedge funds that operate in China.

“I think it will be problematic, but mostly because of the optics back at headquarters in the US,” Gibbs said, noting that many hedge fund managers specifically asked him about the measures at a recent conference he attended in San Francisco.

“Those of us who operate in China long term understand the role the party plays and the importance of aligning with their goals for society. Actually, the conversations they have with you are often about issues of social compliance, like labour standards or equality, which is not necessarily a bad thing,” Gibbs added, describing the scrutiny as comparable to “Chinese-style ESG [Environmental, social and governance]”.

“But in the US, we see the CCP [Chinese Communist Party] and think of the whole party apparatus, and so the idea of a party official in the boardroom sounds much scarier from an American perspective.”
China’s handling of the pandemic has widened the perception gap between the country and global markets, according to some observers [File: China Daily via Reuters]

Some observers say that the perception gap between China and global markets has only widened since the pandemic.

“Many in China don’t realise how dramatically perceptions have changed overseas about their country,” Clark said. “The wall of zero-COVID and the Great Firewall works both ways: they keep capital out and information skewed on both sides. China will have to hustle much more to raise funds going forward. The penny hasn’t dropped yet.”

Beijing may need to work harder at retaining local capital as well.

“We need to remember this is not just about foreign capital and foreigners leaving China. It impacts everyone,” Gibbs said. “Many Chinese investors are heading out, too, to places like Singapore.”

Lian said he has noticed an increasing number of Chinese tech entrepreneurs setting up in Singapore, especially those working on blockchain-based applications.

“It depends a lot on their business structure, but I believe those who can move will continue to do so,” he said.

“So you have these startups that were founded in China, the largest market of all, by Chinese entrepreneurs, and now they are here in Singapore, and now they are bringing their capital with them. To me, that says it all.”

 

 

Original Source: https://www.aljazeera.com/economy/2022/7/21/china-investors-call-it-quits-as-xi-zero-covid-rattle-markets

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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China’s Cryptocurrency Ban: Is FOMO Gradually Being Replaced by FUD?

China’s Cryptocurrency Ban: Is FOMO Gradually Being Replaced by FUD?

After the People’s Bank of China (PBoCprohibited cryptocurrency transactions and mining the price of Bitcoin and other cryptocurrencies fell as a result. In the last 12 years, China has banned cryptocurrency around a dozen times. Every time they impose a ban on crypto currencies, they instil FUD (Fear, Uncertainty, and Doubt) in the crypto community within China and abroad. Is the recent decision to impose another ban on crypto activities shifting the market’s current state from FOMO (Fear of Missing Out) to FUD (Fear, Uncertainty, and Doubt)? I would like to discuss this with the BigONE community.

 

China FUD vs. Crypto

Going down memory lane, China has taken several anti-crypto stances since the early days of Bitcoin following its launch in 2009. China’s Ministry of Commerce banned virtual currencies from paying for goods and services in June 2009, just a few months after the first Bitcoin transaction. The decision was reportedly made to limit the use of video game currencies, which were allegedly devaluing the Yuan at the time.

Since then, China has taken many hostile stances toward crypto activities. At first, it was stated that it was not a “real currency.” Another instance of FUD that stood out in this back and forth was false news published by Weibo in March 2014. According to reports, the “PBoC has imposed an outright ban on Bitcoin transactions. This false news completely destabilized the market, causing thousands of traders and investors to liquidate their holdings, and Bitcoin, which was trading at around $1k at the time of the news, fell in value by half in just three months. Fast forward to 2021; China has stepped up its anti-crypto campaign in the last four months. First, regulators launched a massive crackdown on Bitcoin mining operations. The crackdown had a significant impact on the cryptocurrency scene because China housed 75% of the world’s Bitcoin miners at the time.

Then in July, it was revealed that the PBoC had shut down a tech firm that provided software services to cryptocurrency firms. The price of Bitcoin immediately dropped because of this news. Finally, on September 24th, the PBoC announced that all cryptocurrency transactions in China are illegal. As a result, the price of Bitcoin fell by more than 5%, causing traders and investors to liquidate their positions. Ironically in the US, where talk of crypto regulation from the SEC has been spreading its own FUD, the news from China could slowthe drive to clamp down on Crypto. Notably Senator Pat Toomey tweeted that, “Beijing is so hostile to economic freedom they cannot even tolerate their people participating in what is arguably the most exciting innovation in finance in decades. Economic liberty leads to faster growth, and ultimately, a higher standard of living for all.

While this appears to be, to coin a phrase conjured by a recent Bloomberg article, a “peak FUD moment for crypto” the fact is the actual impact on Bitcoin’s value for these government actions may be over-exaggerated. As the article in Bloomberg went on to say: “The remarkable thing is that — like the proverbial “wall of worry” that never seems to hurt the stock market — growing FUD never seems to do much damage to the value of crypto assets. At least, not for long.

Yes, Bitcoin is down 5% following China’s latest ban on all crypto transactions and vow to root out mining of digital assets, but that’s just another day in the virtual office for this volatile asset class. Bitcoin and other coins actually were hit harder earlier this week when concerns over China Evergrande Group spread throughout all manner of global markets,” the article noted.

 

The rise and fall of FUD

FOMO has increased in the crypto scene due to the rapid growth of Bitcoin and other cryptocurrencies in recent years. To put it simply everyone wants to profit from cryptocurrency price increases. As a result, as new users enter the crypto scene, the adoption rate rises. At the same time the emergence of cryptocurrencies has also resulted in regulatory scrutiny and crackdowns. Despite several hostile actions from China and other regulators, we’ve seen that this caused FUD but for a brief period as the cryptocurrency market always finds a way to recover. I believe that ignorance of the intrinsic value of cryptocurrencies also contributes to FUD, which is why perceptions and news coverage continues to influence the market significantly. After each crypto crackdown by regulators, you have no doubt noticed that Bitcoin often goes on a bull run following a brief price drop.

“The China news is not surprising to those of who’ve been in the cryptocurrency space for some time, and as with most FUD, I believe the decentralized crypto market and community is resilient enough to get through this. From an exchange perspective, the other side of the coin is to stay regulated and follow the rules. Anndy Lian, Chairman of BigONE Exchange commented.

Writing in Forkast, Lily Z. King suggests an upside to all the FUD caused by the ban, will drive a significant decentralization of crypto power from China to other markets, particularly Southeast Asia. As the economy of Southeast Asia has been heavily impacted by the Covid-19 crisis, the new inflow of crypto capital and technology might bring a much-needed boost for their digital economy. Taking the long-term perspective, this diffusion is good for the builder-type among Chinese crypto entrepreneurs and is good for the crypto movement globally,” she concluded.

Although digital currencies may survive China’s recent crackdown on cryptocurrencies, I believe correct information and knowledge about cryptocurrencies and the market are essential for long term success. Still, if news and perceptions continue to influence the market, it is difficult to predict whether FOMO will always triumph over FUD. Will the latest crackdown on cryptocurrency activities lead to another Bitcoin all-time high? The only way to find out is to wait. In the meantime, the knock-on effect in the region may end up benefiting Southeast Asia.

 

Original Source: https://london-post.co.uk/chinas-cryptocurrency-ban-is-fomo-gradually-being-replaced-by-fud/

 

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Strategic Partnership Announced for Doge China, Korea and Singapore with Yuming.com and Blockcast.cc

Strategic Partnership Announced for Doge China, Korea and Singapore with Yuming.com and Blockcast.cc

Tom Peng, Founder of Doge China, Jenny Zheng, Founder of Doge Korea and Anndy Lian, Founder of Doge Singapore have reached a strategic partnership in Seoul, South Korea on 1 October 2019 to work alongside with Yuming.com, a world leading domain market place and Blockcast.cc, a Singapore based blockchain media company.

All parties will continue the decentralized autonomous governance of the doge community in China and develop the blockchain industry based on the Dogecoin consensus. Dai Yue will come up with the ggcoin.com top-level domain to work with the doge community to promote the doge community worldwide.

Jenny Zheng is proficient in Chinese, Korean and English. She has many years of business experience. She has worked for and collaborated with numerous Fortune 500 companies. She is currently the cofounder of a Singapore based blockchain media company called blockcast.cc. Her work in the blockchain industry has been published in many world-class media giants such as NBC, ABC, CBS.

Anndy Lian is a blockchain adviser for the Asian Productivity Organization (APO) and a key member of the South Korea Gyeongsangbuk-do Blockchain Special Committee. He also held key appointments at Singapore Institute of International Affairs and Singapore Business Federation. He has been reported by many international media, such as Forbes, Bloomberg, Reuters, Yahoo, NASDAQ, Fox News, Straits Times, Business Times, ABC News, Singapore Business Review, Asian Business Week, CBS News, CNET, ZDNET, etc. Anndy is also the book author for  “Blockchain Revolution 2030”.

Dai Yue is the founder of the domain name market place called Yuming.com. They are based in Beijing and have been in the market since 1999. Yuming.com is the leading China domain market place and have some of the most valuable domains such as Kr.com, Jp.com are held within their group.

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

j j j