China's start-ups "starved of cash" as investors seek safer bets, Beijing objects to Taiwan vice president at Abe funeral & India set to surpass China's population in 2023 -- China Boss 7.18.22
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China's start-ups "starved of cash" as foreign investors seek safer bets, FT
“Private equity and venture capital managers in China say small and middle-sized groups are facing the greatest fundraising challenges to lock in capital for five or 10 years and longer” as money flows only to the "biggest names" and "safer destinations," Financial Times reported. “In the first half of the year just under $5bn flowed into China-focused private equity and venture capital funds, down 94 per cent from a year ago and the smallest half-year total since 2009, according to data from Preqin,” the business news agency said.
Geopolitics, Covid-19, and a "myriad [of ] new regulations from Beijing" are the main challenges that make China “exponentially” risky for large institutional funds and government pension plans, their advisors say.
FT:
“In order to achieve the return and diversification objectives of the total fund, we have to be there,” [Florida’s chief investment officer Lamar Taylor] said in response to politicians and citizens who questioned putting the state’s retirement dollars to work in the country. Florida had 2.8 per cent of its portfolio allocated to China.
But after Russia invaded Ukraine, Florida was forced to write down $300mm put into Russian securities to “essentially zero”. Noting the unprecedented sanctions on Russia, Taylor in March said the rising “downside risks” for China had spurred the manager to suspend new investments.
Bloomberg’s Sofia Horta e Costa also said last week that “China [has become a] pariah for global investors as [Xi Jinping’s] policies backfire.”
Horta e Costa, Bloomberg:
Money managers once enticed by China’s juicy yields and huge tech companies now say reasons to avoid the country outweigh incentives to buy. They cite everything from unpredictable regulatory campaigns to economic damage caused by strict Covid-19 policies, not to mention growing risks stemming from a wobbly real-estate market and even Xi’s coziness with Russia’s Vladimir Putin.
… “The supertanker of Western capital is starting to turn away from China,” said Matt Smith of Ruffer LLP, a $31 billion investment firm that recently shut its Hong Kong office after more than a decade because of shrinking demand for on-the-ground equity research. “It’s just easier to put China aside for now when you see no end in sight from Covid Zero and the return of geopolitical risk.”
For the rest of FT’s report, ‘Exponentially’ risky China leaves venture capital funds starved of cash, click here. For Horta e Costa’s Bloomberg update, China Is Pariah for Global Investors as Xi’s Policies Backfire, click here.
Law and International Xi
Beijing objects to Taiwan vice president at Abe funeral
“China's Foreign Ministry said on Tuesday its embassy in Japan had lodged ‘stern representations’ with the government there about Taiwan Vice President William Lai attending the funeral of former Japanese prime minister Shinzo Abe,” Reuters reported. “Lai [is] the most senior official to visit Japan since Tokyo broke official ties with Taipei in 1972 and forged relations with Beijing,” the news agency said.
Despite Beijing’s whines, the late Abe would probably be pleased to have Taiwan’s no. 2 pay final respects. In an opinion written for the Washington Post, Josh Rogin noted that “[o]ne of Abe’s final diplomatic acts, earlier this year, was to sound an alarm about China’s increasingly dangerous menacing of Taiwan,” while “call[ing] for the United States to abandon its policy of ‘strategic ambiguity’ and publicly declare its intention to come to Taiwan’s defense if China attacks.”
“The human tragedy that has befallen Ukraine has taught us a bitter lesson,” [Abe] wrote. “There must no longer be any room for doubt in our resolve concerning Taiwan, and in our determination to defend freedom, democracy, human rights, and the rule of law.”
For the rest of Reuters report, China complains to Japan about Taiwan vice president at Abe funeral, click here. For the rest of Rogin’s WaPo op-ed, Abe’s legacy is a world better prepared to confront China, click here.
Tibetan activist succumbs to health complications sustained from torture
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