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Mark Mobius vs China puts spotlight on country’s control over investment outflows

IFM_Billionaire Investor Mark Mobius
China has made a 'very significant' effort to allegedly prevent Mark Mobius from removing capital from Chinese-based stocks

Billionaire investor and founder of Mobius Capital Partners Mark Mobius has now raised a red flag about doing business with China.

He informed US media about his inability to take his money out of the world’s second-largest economy due to the Xi Jinping government’s capital controls, while cautioning investors to be ‘very, very careful’ about investing in an economy under a tight government grip.

“I’m personally affected because I have an account with HSBC in Shanghai. I can’t get my money out. The government is restricting the flow of money out of the country. So I would be very, very careful investing in China,” Mark Mobius told Fox Business.

The Mobius Capital Partners founder also noted that China’s bottom line, under its President Xi Jinping, is moving in a different direction than the approach preached by its former open-minded-market revolutionary leader Deng Xiaoping.

“Now you have a government which is taking gold in shares in companies all over China. That means they’re going to try to control all these companies,” Mark Mobius explained.

“So I don’t think it’s a very good picture when you see the government becoming more and more control oriented in the economy,” the billionaire added further.

China has made a ‘very significant’ effort to allegedly prevent Mark Mobius from removing capital from Chinese-based stocks, the investor informed.

“I can’t get an explanation of why they’re doing this. It’s just amazing. They’re putting all kinds of barriers. They don’t say, ‘No, you can’t get your money out,’ but they say, ‘Give us all the records from 20 years of how you’ve made this money,’ and so forth. It’s crazy,” Mark Mobius remarked further.

Mark Mobius, who had earlier led emerging market investment at Franklin Templeton Investments and was in news recently known for his bullish views on the Chinese economy, now thinks that the ‘best investment alternatives’ are India and Brazil.

“You’ve got a billion people, they can do the same thing that the Chinese do. They can do the same kind of manufacturing and so forth,” the billionaire remarked.

“I’m now in Brazil, and Brazil, you’ve got 250 million-plus people, very good people, open society. Hey, why not come here? It’s another alternative,” he added.

Denying the above allegations, officials at the China State Administration on Foreign Exchange (SAFE) told CNBC that it was a matter of a “basic process and internal control requirements of the bank handling specific business.”

“We have noticed that relevant market participants have doubts about the bank’s handling of their personal fund remittance businesses,” SAFE said, while adding, “There is no change in the country’s policy on cross-border remittance of funds.”

Meanwhile, in a setback for the Xi Jinping government, net cash outflows from Chinese-stock mutual funds have hit a two-and-a-half-year high, as the market shifts from buying to profit-taking, amid divergent views on new economic measures announced at China’s National People’s Congress.

The four-week outflow figure hit a record average of USD 970 million in the week leading to March 1. The tally was the highest one since August 2020, stated US market research firm EPFR.

Buying of Chinese stocks expanded after the beginning of 2023, mainly among short-term investors such as Asian hedge funds, due to expectations that the world’s second-largest economy would get back to normal faster than expected as the ‘Zero-COVID’ policy got eased up.

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