Xi Pivot Fails to Stop Exodus by Biggest Investors in China Tech

Xi Jinping led a parade of officials this spring vowing to revive China’s economy, hoping to repair the damage wrought by years of Covid Zero and regulatory clampdowns. Some of the world’s biggest investors are selling anyway.

Two pioneering financiers of China’s private sector — and hence the country’s economic miracle — have signaled in recent days their intentions to continue pulling back from marquee investments in the country. European internet powerhouse Prosus NV registered more than $4 billion of stock in Tencent Holdings Ltd. for potential sale in Hong Kong, while news emerged that SoftBank Group Corp. is preparing to hasten its exit from Alibaba Group Holding Ltd. — the e-commerce leader that made Masayoshi Son’s name.

The moves accelerate the unwinding of some of the most lucrative bets in business history. While both Prosus and SoftBank declared their over-arching plans last year and are acting partly due to reasons outside their China outlook, the latest steps have dented investor optimism over a litany of recent promises from Beijing to welcome foreign capital and loosen its grip on the tech sector. Tencent slid the most in over two months Wednesday, while Alibaba wiped out as much as $13 billion of value on Thursday.

“Reported plans to lower exposure in Alibaba by SoftBank may reiterate the prevailing loss of confidence in Chinese tech firms by foreign investors, giving rise to concerns that more may do the same,” said Jun Rong Yeap, an analyst at IG Asia.

The developments mark the latest challenge to China’s effort to mend its image as a country that’s increasingly isolating itself from the West and hostile to private capital. Xi again called on foreign investors to “seize opportunities” in China during a tour of southern Guangdong this week, during which he stopped by an LG Display Co. plant.