As the Chinese Government Flexes its Regulatory Muscles, What Are the Implications for Investors?
OCTOBER 15, 2021
- The Chinese government is tightening its regulatory hold on the country’s society and economy.
- This has implications for investors, particularly those who hold American Depository Receipts (ADRs) in Chinese companies.
- The impact of new Chinese government regulations is driving a wave of shareholder class actions against Chinese ADR companies.
- Increased regulations in China also have implications for ESG-motivated investors, with an increase in concerns around human rights and labor issues.
- Securities class actions and norms-based controversies are two very different data sets, but both are showing growth in the number of results associated with increased regulatory action in China.
- As climate change and other ESG factors drive a heightened focus on stewardship practices among investors, this paper identifies an opportunity for new insights to be generated by the examination of differing data sets.