Cathie Wood says China crackdown will weigh on investors' memories and could happen to any industry

Published Thu, Aug 19 202112:33 PM EDTUpdated Thu, Aug 19 20213:30 PM EDT

Widely followed money manager Cathie Wood said the crackdown efforts by Chinese regulators will have a lasting impact on investor sentiment and the affected stocks could have a hard time bouncing back. "Because of the social engineering it seems or reengineering taking place in China, ... the valuations associated with these companies are damaged, and we don't think they're going to go up anytime soon," Ark Invest's Wood said Thursday on CNBC's " Tech Check ." "Nationalizing an industry like the online education industry, ... that's going to sear our memories for a long time. That could happen to any industry," she added. Beijing has stepped up its regulatory crackdown on a variety of industries, including tech, education and gaming. China unveiled a ban that prevents companies that teach school curriculums from making profits, raising capital or going public. The government is clamping down on the flood of Chinese listings in the U.S. and is tightening restrictions on cross-border data flows and security. Ride-hailing app Didi 's shares dropped about 33% over the past month after Beijing launched a cybersecurity investigation and suspended new user registrations. Wood said she feared that the increased regulatory scrutiny on industries with innovative technology could hurt the country's long-term economic growth. "China wants to win. The only way they're going to win is if they embrace innovation as aggressively or more aggressively than any other country. And they're trying to do that, but I fear for them, that becoming more insular is going to harm their speed in terms of innovation," she said. The Tesla bull noted that the electric vehicle maker has been extra cautious about doing business in China, which is representative of other American companies' behavior in the nation. "We can tell just by looking at what Tesla is doing, in China, that it is listening very closely to what the government is saying. Safety is paramount and it is taking more precautions I think than might otherwise have been the case," she said. Tesla is one of ARK Innovation ETF's top holdings.

GP: Cathie Wood attends the East Side House Settlement Gala Preview of the 2010 New York International Auto Show at Javits Center on April 1, 2010 in New York City.

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