•Ark’s Wood has slashed China equity holdings this year
•Wood is pessimistic about China tech valuations
China’s decision to stamp out bitcoin mining and clampdown on cryptocurrency trading this year has puzzled US tech investor Cathie Wood.
“In the crypto world, China is just shutting itself out of an open-source ecosystem,” said Wood, founder of Ark Investment Management, in a webinar on Tuesday. “Why would you cut yourself off? China leapfrogged our (US) financial services system, and now with crypto we have an opportunity to leapfrog them.”
China’s tightened controls over cryptocurrencies in recent months as it widened controls over the technology industry. Cryptocurrency trading is banned in China, and authorities have recently closed mines and warned banks to halt related transactions.
After closing software company Beijing Qudao Cultural Development last month, alleging it had been involved in providing software services for cryptocurrency transactions, the central bank said the move was necessary “to prevent and control the risk of speculation in virtual currency transactions, and protect the safety of the public’s assets.’’
Ark has slashed its holdings of China equities this year and Wood is pessimistic about the implications on valuations of the recent regulatory shift. It “could ruin the multiple structure of the market for quite some time,” she said, referring to multiples of earnings for prices of Chinese stocks.
• Jon Macaskill