CHINA STOCK - SCRATCHING THE SURFACE ON FRAUD AND MISCONDUCT | Summary and Q&A

TL;DR

Foreign investors do not actually own shares in Chinese companies due to complex ownership structures.

Key Insights

• 🍉 Foreign investors in Chinese stocks do not have direct ownership and are vulnerable to changes in ownership terms.
• 👻 Variable interest entities allow economic interest but not legal ownership in Chinese companies.
• 🗯️ Chinese government regulations can impact foreign ownership rights in Chinese stocks.
• 🥺 Risks include contractual agreements being deemed illegal, leading to potential loss of ownership.
• 🎮 Complex ownership structures in Chinese companies can impact foreign investors' control over their investments.
• 🤨 The lack of direct ownership in Chinese stocks raises concerns about control and legal rights.
• 💨 The variable interest equity structure is a way for foreigners to invest in restricted Chinese industries.

Transcript

good day fellow investors you can't own Alibaba and you are not owning it if you think you own the shares we're going to go through six points to liberate on what can happen to you as an owner of what you think are shares in Chinese stocks so the story is all about tariffs trade wars and the negotiations between the US and China are getting harder ... Read More

Questions & Answers

Q: How do variable interest entities affect foreign ownership of Chinese stocks?

Variable interest entities create a structure where investors have contractual rights instead of direct ownership in Chinese companies, leaving them vulnerable to changes in ownership terms.

Q: What risks do foreign investors face with Chinese stock ownership?

Foreign investors face the risk of contracts being deemed illegal by the Chinese government, potentially resulting in loss of ownership rights and investment value.

Q: How does the variable interest equity structure work for Chinese companies?

The variable interest equity structure allows foreigners to have an economic interest in Chinese companies in restricted industries through contractual agreements, not direct ownership.

Q: How can changes in ownership terms impact foreign investors in Chinese stocks?

Changes in ownership terms by Chinese management can alter contractual agreements, leading to potential loss of ownership rights and control over investments.

Summary & Key Takeaways

• Ownership of Chinese stocks is complex due to variable interest entities.

• Foreign investors only have contractual rights, not direct ownership.

• Chinese companies could potentially change terms, leaving investors with nothing.