Strong supervision will not hinder the strategic attractiveness of China's assets


  Our reporter Jiang Huadong

  Recently, China's series of measures to strengthen supervision have attracted the attention of overseas investors.

Some investors simply view the recent volatility in the capital market as "the end of the overseas attractiveness of Chinese technology stocks."

However, institutional investors who have been deeply involved in the Chinese market for a long time take a more rational and long-term perspective on the above changes, believing that Chinese assets are still strategically attractive and are an indispensable part of global asset allocation.

  The Bank for International Settlements recently stated that "the entry of large technology companies into the financial services industry has brought new challenges involving topics such as market power concentration and data governance."

Global central banks and financial regulators urgently need to control the increasing influence of large technology companies. It is especially important to note that the massive amounts of data controlled by large technology companies can quickly reshape the financial industry and even undermine the stability of the entire banking system.

  Anshi Group, which has long been concerned about emerging economies such as China, believes that the judgment held by some investors that "the Chinese government's strong regulatory measures in the fields of education, technology and real estate will spill over to other industries" is far-fetched.

The Chinese government's adjustment of policies in accordance with the rapidly changing domestic economic and social situation does not mean that the overall direction of promoting the development of the private economy and technology industry will be adjusted.

On the contrary, the adjustment of the above-mentioned industrial sector regulatory policy is consistent with the overall goal of the Chinese government-more sustainable and inclusive growth.

Therefore, the adjustment of regulatory policies does not affect the company's judgment on the overall model of China's economy.

  JPMorgan Asset Management believes that the strengthening of supervision by the Chinese government does not mean that the overall attitude of the Chinese government towards the non-public economy or foreign investment has changed.

On the contrary, the recent regulatory measures aimed at China's Internet industry are clearly designed to promote market competition and enable more private enterprises to share long-term development opportunities.

These actions collectively show that the Chinese government continues to regard domestic and foreign capital as a positive factor in promoting the operation of the market economy.

  Regarding the question of whether Chinese technology companies are still attractive under the context of enhanced supervision, Robin Pabruk, co-head of alternative investments in Asian equities of Schroder Funds, recently stated that under current policies and economic and social environments, Chinese Internet companies face Certain pressure, but this will not make the stocks of Chinese Internet companies unavailable for investment.

Chinese Internet companies are still outstanding companies with amazing platforms, innovative management and strong cash flow.

As the dust settles, after investors gradually adapt to the "new normal", we will begin to pay attention to the industry, especially companies with less exposure to competitive risks and policy risks.

  Robin Pabruk said that, on the whole, China will remain a key area for investors who are concerned about the Asian market.

Although investors will be more cautious, China's strong macroeconomic momentum remains intact.

Although the micro-environment has changed, China still has the world's best companies. China is still a huge market with a high level of innovation, highly integrated with the global economic system.

Therefore, China will remain the focus of the company's future investment.

  BlackRock recently released a report that believes that a series of recent regulatory policies, especially reforms in the education industry, show the Chinese government's determination to continue to deepen reforms, especially its determination to promote high-quality development rather than simply rapid development.

A more efficient economy requires more efficient capital allocation.

In the context of China's continuous reforms, China's economic growth target in 2035 will surely be achieved.

Based on this, BlackRock will continue to increase its holdings of Chinese assets on a large scale.

  UBS Wealth Management Global Chief Investment Officer Mark Heifer said that investors need not worry too much about China's tightening of supervision.

Whether it is the strengthening of VIE supervision, the return of more Chinese concept stocks and the secondary listing in Hong Kong, the impact will be short-lived and will not cause a substantial discount to the valuation.

Although the share price of China's leading Internet companies has fallen sharply, it is likely to regain lost ground in a few quarters.

Therefore, although China's technology leaders continue to be under pressure due to supervision, regulatory actions are not expected to weaken the strategic attractiveness of the Chinese market, and China's new economy still has long-term upside potential.

  The recent changes in the regulatory environment have affected the sentiment of some investors towards Chinese assets, but long-term investors are still optimistic about the investment prospects of other industrial sectors in China.

  JPMorgan Asset Management recently issued a statement that after the sharp correction of some Chinese company stocks, many investors are asking how they should allocate Chinese stocks in their investment portfolios.

JPMorgan Asset Management believes that Chinese assets are still an indispensable part of any investment portfolio, and Chinese stocks are still an important part of global stock allocation.

JPMorgan Asset Management maintains a long-term optimistic view of Chinese stocks, focusing on structural growth areas such as technology, medicine and consumption.

Although some industries face regulatory pressures, the semiconductor, software industry and carbon neutral industries will usher in continuous policy dividends.

In the long run, the Chinese government still hopes to open its capital market to international investors.

Therefore, the recent series of events are more temporary, and investors need to understand the social equality policy goals of the Chinese government.

  Robaco Group also believes that the recent series of regulatory measures from the government are not aimed at the entire private sector, but focused on industries that are closely related to social equality, national security, and data privacy. In the process of building a new era in China, the Chinese government pays attention to structural reforms and attaches importance to the quality of economic development rather than quantity. Therefore, there are plenty of investment opportunities in those areas with structural growth and reform trends. The current A-share market is facing relatively small regulatory uncertainty and valuations are lower than historical averages. Many sectors such as renewable energy, technology hardware, and high-end manufacturing still enjoy policy dividends. Therefore, the A-share market is still the current first choice for investment in China.

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