Investors around the world and here at home are becoming skeptical of Chinese stocks after that country’s government unexpectedly cracked down on several big Chinese companies in industries from tech to education. These moves shut down apps, scared off public offerings and sent shares tanking.

The situation has some wondering whether the world’s two largest economies are in the process of disentangling themselves financially.

Investors who were excited about Chinese equities have had a rude awakening amid the recent interventions over issues like antitrust, data sharing and foreign ownership.

“Chinese policy is becoming more of a tail risk,” said Shirley Wu, a global investment strategist at Bank of America. A tail risk is something really terrible that probably won’t happen, but could.

“As of August, 16% of our investors do think that Chinese policy is the biggest tail risk over the coming year,” Wu said.

Sabri Ben-Achour Aug 18, 2021, Source: