Regulatory storm due to ease for Chinese equities
It has been anything but a quiet summer season for Chinese equities.
When China pulled the plug on Ant’s IPO in November 2020, it was widely assumed the official explanation about risks to financial security was only a smokescreen for a more personal riposte to Jack Ma, who had become increasingly vocal in his criticism of China’s banking regulator.
Since then, the crackdown has extended more broadly, and now includes almost every successful internet company, ride-hailing company Didi Chuxing, and of course the private education sector.
This raises some important questions: why does China want to undermine businesses that have seemingly been so successful? Could the severity of the clampdown on the education sector be repeated in other areas? And how much bad news is already in the price?