Regulatory Uncertainty Growing
SoftBank Chairman and CEO Masayoshi Son announced that he would temporarily stop investing in Chinese enterprises. South Korean individual investors investing in Chinese enterprises are paying close attention to the situation.
He said on Aug. 10 that the pause would be until uncertainties related to the Chinese government’s regulations targeting local enterprises subside. SoftBank is a huge investor in China. In its Vision Fund, investment in China accounts for 23 percent of the total investment behind that in the United States, 34 percent. In addition, SoftBank’s investment in Alibaba amounts to 39 percent of its total assets.
His announcement has to do with the ongoing decline in return on investment, too. This year, the stock prices of Chinese companies in which the Vision Fund invests have plunged. For example, that of Didi Chuxing have dropped 35.15 percent since its listing on the New York Stock Exchange in late June this year and that of Alibaba have dropped almost 30 percent since February this year.
He also mentioned that investment in Chinese companies accounts for only 11 percent of SoftBank’s investment since April this year. In the New York Stock Exchange, investors have dumped their Chinese stocks since last month. The Nasdaq Golden Dragon China Index fell 13.3 percent from July 10 to Aug. 10. The index follows the prices of 98 Chinese blue chip stocks listed on the exchange.