Investors Rethink China Bets After Beijing Crackdown Triggers Stock Market Rout

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American investors are asking whether China Inc. is still worth the risk following a widening series of regulatory crackdowns that have wiped some $400 billion off the value of U.S.-listed Chinese companies.

Investors ranging from pension fund Orange County Employees Retirement System in California to money manager William Blair & Co. are rethinking their portfolios following Beijing’s decision last week to curtail the operations of China’s for-profit tutoring industry along with its ongoing campaign to rein in tech companies. The moves fueled large declines across sectors of China’s stock markets and hammered Asia-focused funds stateside.

The investor retreat sent tutoring firm TAL Education Group ’s American depositary receipts down some 70% in a matter of days to $6.19 Friday morning. TAL traded above $90 in February. American depositary receipts, or ADRs, are certificates issued to U.S. investors that represent…

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