2023-08-11 05:03:42
U.S. President Joe Biden signed a new round of investment ban on China on Wednesday (9th). Wall Street analysts are worried that Beijing may retaliate and may stop buying American technology products due to the lessons learned by Micron.
U.S. President Biden signed an executive order on Wednesday (9th), announcing that it will restrict U.S. private equity, venture capital firms, and joint ventures from investing in China’s three sensitive technology fields of artificial intelligence, quantum computing, and semiconductors.
The U.S. Treasury Department is weighing exemptions for U.S. investments such as listed securities and index funds, with companies given 45 days to provide public comment.
Rick Meckler, partner at Cherry Lane Investments, said: “It depends a lot on how China decides to respond. The very important technology war between the two countries is a big negative factor, and the Biden administration seems to be trying to do it without causing China too much. Announcing the news under turbulent circumstances.”
Some analysts said Beijing had limited options and was unlikely to escalate the situation. However, some people think this view is too optimistic, China in May for Micron (MU-US)’s ban is a warning sign.
(Photo: REUTERS/TPG)
In May, China made a “conclusion of not passing the cybersecurity review” on Micron’s products and ordered a ban on China’s domestic manufacturers of critical infrastructure to purchase Micron’s products. The United States accused Beijing of growing tension between the two global economic powerhouses. punish other American companies.
Tom Plumb, manager of the Plumb Balanced Fund in Wisconsin, believes: “It is naive to think that China will not take some form of retaliation. China may restrict the export of rare earths used in consumer electronics, electric vehicles and other parts. Or target other U.S. tech companies.”
U.S. private equity funds and venture capital funds that have withdrawn from China may wait and see, waiting for further clarity on the implementation of the new regulations. Some securities investors are also reducing their exposure to China.
Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors, said: “Some clients have asked for reduced or zero exposure to China through stocks, bonds and ETFs. After the Biden administration announces further restrictions, we may receive more similar requests.”
Phillip Wool, co-portfolio manager of the Rayliant Quantamental China Equity ETF, said U.S.-China tensions were causing investors to miss out on China’s economic growth.
“The bigger risk for investors than in other equity markets is not investing in a market that is so undervalued and there are a lot of companies in China that are fundamentally strong and that are growing fast,” Wool said.
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