“We have not eliminated our positions but we have reduced our positioning in China dramatically and we have swapped some of our holders, which became losers, into companies that we know are courting the government with ‘common prosperity’,” Wood was quoted as saying.
Wood told investors at a Mizuho Securities conference on Thursday that her strategy shift was prompted by a series of regulatory changes imposed over the course of a weekend in July by the Chinese government on the country’s online education industry, the FT said.
Authorities are now focusing on social issues and social engineering at the expense of capital markets, she added. CNN Business has reached out to Ark Invest and the conference organizers for comment.
Wood becomes the latest high profile investor to raise red flags over China, where the ruling Communist Party has launched a widespread crackdown on private enterprise.
Companies in the tech, education and gaming sectors have faced an onslaught of new rules relating to data privacy and workers’ rights in recent months. Beijing’s tighter grip on business has rattled global investors, wiping trillions off the value of Chinese stocks and triggering fears about the future of innovation in China.
To protect its returns, Ark Invest is focusing on companies that are “currying favor” with Beijing, Wood said.
Wood said Ark Invest doesn’t plan to “give up” on China, because the country is so focused on innovation and “inherently entrepreneurial.”
“We think they’ll reconsider some of these regulations with time,” she added, referring to the government.
— Michelle Toh, Laura He and Paul R. La Monica contributed reporting.