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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Anndy Lian: COVID-19 has accelerated blockchain adoption by corporates

Anndy Lian: COVID-19 has accelerated blockchain adoption by corporates

Thanks Platform Africa for taking the time to speak to me. I spoke about my journey in the blockchain space and also how I see blockchain adoption evolute. I must emphasize again, we are at the early stages of blockchain and crypto. Let your imaginations run wild, you may be the next Elon Musk in the crypto industry.

 

 

Anndy Lian: COVID-19 has accelerated blockchain adoption by corporates

We speak to Anndy Lian, a blockchain expert who has played a pivotal role in bringing greater acceptance to blockchain in the public sector as the Blockchain Advisor for the Asian Productivity Organisation (APO), an intergovernmental organisation committed to improving productivity in the Asia-Pacific region.

Anndy is currently serving as an Advisory Board Member for Hyundai DAC, the blockchain arm of the South Korean car manufacturing major.

He has also written a book titled “Blockchain Revolution 2030”, where, together with co-authors Park Young Sook and Shawn Hamnison, he shares his expert insights on how blockchain technology plays an important role in the Fourth Industrial Revolution.

Read our edited excerpts from an exclusive interview in which Anndy advises African governments to put away their old thinking and embrace the future with blockchain technology, while cautioning them to tread carefully in the digital currency space:

 

  • How did your journey in the blockchain space begin?

My blockchain journey began around 2013, with bitcoin. Back then, we used bitcoin to purchase items online from gaming assets to accounts. I began to see it as a form of future currency.

Then, in 2016, I got interested in blockchain technology after a closed door session organised by a pharmaceutical company. In that session, the power of blockchain – tracing, tracking and anti-counterfeiting properties – opened my mind to the endless possibilities offered by blockchain technology.

 

  • As an Intergovernmental Blockchain Advisor, what role do you envisage for blockchain in the public sector? Has COVID-19 accelerated the adoption of blockchain by governments? 

In the beginning, many of my friends thought that I was crazy and was wasting my time convincing governments of the benefits of blockchain. But time has proved me right. Governments were indeed very reluctant to listen at first. Some of them were worried about the change and uncertainty that blockchain would bring in its wake, while others were firm in their stand that blockchain was all hype and nothing else. As I brought in proper companies to showcase its capabilities, some of them eventually changed their perspectives. Now they want to know more about cryptocurrencies. This is how much change there is between now and then.

COVID-19 did accelerate technology adoption as a whole. This includes blockchain too. In many ways, this pandemic is a blessing in disguise for the technology industry. We can see that tech stocks are valued higher, digital payments have become more popular, and e-commerce has fully integrated into many lives.

 

  • In particular, could you take us through the latest trends, concepts and applications of blockchain technologies? 

Trends and concepts move very fast in the crypto space. The buzzwords right now are DeFi and NFT.

DeFi is decentralised finance, a blockchain-backed finance system that has no central authority.

While NFT stands for non-fungible tokens that act as a non-duplicable digital certificate of ownership for any assigned digital asset.

 

  • What advice would you like to give to governments in Africa on adopting blockchain in the public sector, given its ability to infuse transparency and increase productivity? 

My advice is to put away the old thinking and embrace the future. Many times governments are trapped in their traditional thinking and legacy issues. I often tell them to put all these doubts aside and ask them the one question that dares to get at the truth: What would they do if they could reset their country?

Most of the time, the obvious reasons are right in front of them. Being open and addressing the pain points makes them understand the situation they are currently in, and where they want to be.

Don’t get me wrong, I am not trying to get governments to completely change their current system and forget about their past. That cannot be done. I just want them to realise what can be done better if they have a chance.

 

  • As an Advisory Board Member for Hyundai DAC, could you take us through the possibilities offered by blockchain in the corporate space? Has COVID-19 accelerated the adoption of blockchain by the private sector?

From a private sector standpoint, COVID-19 has accelerated the case of blockchain for corporates who were earlier in their comfort zones. Many of them who were still in the proof of concept (POC) stages have really stepped up during this period, for instance, healthcare start-ups. Such projects tend to be the cleanest and leanest, resulting in a number of them passing their POC stage quickly and getting deployed in merely a quarter, now that there is greater will to see them through.

Indeed, blockchain technology has matured a lot during this period of time. Take elections, for instance. Blockchain technology was used in the US elections during the pandemic.

 

  • Do you believe that the growth of blockchain and cryptocurrencies is inherently complementary – or can blockchain reach its true potential even in the absence of mainstreaming of cryptocurrencies?

Indeed, blockchain and cryptocurrencies are definitely complementary. Blockchain works hand in hand with other technologies such as the Internet of Things (IoT), Artificial Intelligence (AI) and Machine Learning, among others. Cryptocurrency is one of its products.

In the future, I am sure that blockchain technology will be widely used and we won’t even know that we are using it. So my advice is to bear with the current times and keep in mind that we are at the very beginning of an exciting journey.

 

  • With Elon Musk having embraced cryptocurrencies as a payment mode for Tesla, do you see this as a major move in the mainstreaming of digital currencies, or is there still a long way to go? 

Elon is certainly a visionary. He did help to market crypto to another level. However, is this enough? The unfortunate but true answer is, it is not. For crypto to truly take off, corporates must continue to be open, adapt to the changes, and adopt new technology.

Back to Elon and Tesla accepting bitcoin. If you read the news he will accept and keep bitcoin, and not convert it to fiat. So far, so good. However, for cryptocurrency to be a currency, it needs to be used and circulated – keeping it as a store of value alone won’t help. Hope I am not being controversial here!

 

  • With African economies Tunisia and Senegal being first movers in launching their digital currencies, both based on the blockchain, what role do you think Africa can play in adoption of, and advocacy for, digital currencies worldwide, much as M-Pesa had paved the way for mobile payments across the globe?

While I can’t speak specifically for African economies, I can share my view generally. Digital currencies are not crypto in that, unlike cryptocurrencies, they depend on a central authority.

If the fiat currency and economy are not doing well, it will make no difference whether they are available in a digital form or not. Hence, I would advise that countries must think twice before adopting a digital regime.

 

  • Finally, could you tell us more about your book ‘Blockchain Revolution 2030’? What insights would you like to share with those who are seeking to learn more about this exciting technology? 

Blockchain Revolution 2030 highlighted how blockchain technology plays an important role in transforming and creating a new model for the digital economy. It has chapters on how the supply chain and finance sectors can be enhanced. It also has chapters talking about how NFT will change the art scene. Take note that this book is drafted in 2018, and many of our “predictions” have since come true.

For those who are thinking of joining us in this blockchain journey, I highly encourage them to take a longer term perceptive. Experience comes with time. Always learn from the right source and do not take short cuts. My door is always open.

 

 

Original Source: https://www.platformafrica.com/2021/03/30/anndy-lian-covid-19-has-accelerated-blockchain-adoption-by-corporates/

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