The recent cascade of new regulations, impacting a wide range of sectors from fintech to property and private tuition, was widely perceived as a retrograde move by the government.
With the economy largely market-driven over the last four decades, these sudden moves have taken equity markets by surprise.
In this equities webinar co-hosted with PineBridge Investments, we discussed how investors could mitigate China policy risk in the same way as all other risks considered to be “unremunerated”.
In addition, we addressed:
- The fallacy of risk diversification vs risk replication
- The problems with vendor-driven market segmentation
- Idea generation: Can there be a differentiated approach to owning the benchmark?
- Policy reforms and societal needs: Why ESG issues matter in stock selection
Transcript (with timings)
3:25 – China’s current approach to ‘common prosperity’: Why the market is wrong
7:04 – Understanding the long-term goal of the regulations in China
7:56 – Difficulties of the ‘three mountains’
8:52 – China’s 2025 goals for income equality are ambitious.
12:31 – Income redistribution in China is a different concept to say France.
13:44 – The domestic economy in China will benefit from the reforms.
14:36 – Chinese government policy risk is real. How can investors quantify that in the near term?
19:31 – The VIE (variable interest equity) structure for Chinese companies has some question marks
21:33 – Impact of the US Fed’s policies on China
26:16 – You don’t need to invest in Chinese companies to invest in China
27:57 – How do investors obtain sufficient Chinese exposure whilst deviating from the benchmark
30:19 – Risk diversification vs risk replication
34:23 – Pros and cons of investing in the technology sector
37:26 – Instances of governance failure with some fintech companies
39:16 – What about Taiwan?
43:02 – Dependency: China vs other large economies
- Anik Sen, Global Head of Equities, PineBridge Investments
- Rob Hinchliffe, Portfolio Manager & Head of Global Sector Cluster Research, PineBridge Investments
- Teik H. Tan, Executive Director, Investment Innovation Institute [i3]