Chinese Government Regulatory Implications for Investors

Chinese Government Regulatory Implications for Investors

OCTOBER 15, 2021

KEY TAKEAWAYS

  • 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.

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