China’s new restrictions on its education and tech companies should come as “par for the course” for emerging market investors, Astoria Portfolio Advisors founder and chief investment officer John Davi told CNBC’s “ETF Edge” this week.
“There’s always regulatory risk investing in China,” he said in a Monday interview. “Over the last 10 years, there’s been a series of regulatory tightening policies in China across a number of different sectors. Each time that sector gets hit 20-50%.”
“Right now, there’s value in there,” he said. “I think there’s more downside, but I think long term, … there’s a way to monetize these billions of people in broad emerging markets and China’s a good way.”
In the last month, the KraneShares CSI China Internet ETF (KWEB) has raked in around $2 billion in inflows, a sign that some investors are looking to the downtrodden group for value, Davi said. The ETF is down roughly 23% in the past month.
Not all U.S. investors are on the same page, Life + Liberty Indexes founder Perth Tolle said in the same interview.
“These are the very issues why people don’t invest in emerging markets in the first place: a lack of transparency and the political risk,” Tolle said.
“In a time when U.S. valuations are so high, you don’t want to be discouraging people from investing overseas,” she said. “Unfortunately, I think that is what’s going to happen here, especially since China makes up 40% of most emerging market indexes.”
