• Investor Mobius does not have access to his account with HSBC in Shanghai
• Analysts have recently been optimistic about China’s economy and stock market
• Mobius warns investors to be cautious when investing in China
No control over own account
According to reports from Fortune, investor Mark Mobius says he can’t get his money out of China right now. Due to capital controls, it is probably impossible for him to withdraw his money from China. Specifically, Mobius has funds in an account with HSBC, but cannot access them: “I have an account with HSBC in Shanghai. I can’t withdraw my money. The government is restricting the flow of money out of the country,” explains the experienced emerging market investor in an interview with Fox Business. The Chinese government plays a major role in this problem and puts “all kinds of obstacles” in its way. “They don’t say, ‘No, you can’t get your money out,’ they say, ‘Give us all the 20-year record of how you made that money,’ and so on. It’s crazy,” he notes. Taking money out of the country requires individuals and businesses in China to comply with policies and restrictions set by regulators like the State Administration of Foreign Exchange (SAFE), which in turn regulates China’s foreign exchange market, Fortune said. Such restrictions are very different from more open economies where money can move freely in and out, such as the US or the semi-autonomous Chinese city of Hong Kong.
China’s economy
The US magazine goes on to explain that foreign companies and investors initially took a negative stance towards the Chinese economy in 2022. This was due to the official crackdown on large private sector companies and the economic damage from the strict COVID zero policy, which had led to billions of dollars in monthly capital outflows as investors sold off bonds and stocks. However, China’s rapid reopening prompted analysts to have more optimistic forecasts for both the Chinese economy and Chinese stock markets. Finally, in late February, Goldman Sachs estimated Chinese stocks could rise as much as 24 percent by year-end as sentiment shifts “from reopening to recovery.”
Mobius warns investors to be careful
Mobius, who led emerging market investing at Franklin Templeton Investments for three decades, is actually known for his optimistic view of China, according to Reuters.
But now, Mobius says, he’s “very, very cautious” about investing in the country. “Now we have a government that is buying golden stakes in companies across China. That means they’re going to try to control all these companies… So I don’t think it’s a very good picture when you see that the government is increasingly controlling the economy,” the investor told Fox Business.
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Image sources: Franklin Templeton Investments, Axel Griesch for Finanz Verlag