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'Shocked Investors Scour Xi’s Old Speeches to Find Next Target'

'Shocked Investors Scour Xi’s Old Speeches to Find Next Target'
'Shocked Investors Scour Xi’s Old Speeches to Find Next Target'
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BIG IDEA | ‘While China’s policy moves can feel ad hoc particularly to foreign investors, the changes are quite targeted on certain sectors.’
‘Traders began scouring Xi’s speeches to find clues about which industries might be next.’

‘As $1 trillion evaporated from Chinese stocks last week, some investors realized they hadn’t paid enough attention to the country’s most important man: President Xi Jinping.’

  • ‘Traders began scouring Xi’s speeches to find clues about which industries might be next after his administration abruptly smashed the country’s $100 billion for-profit education sector, according to several employees at Chinese financial firms who asked not to be identified.’

‘ “Investors and analysts have tended to dismiss party-speak, usually because it’s so impenetrable,” said Dan Wang, a technology analyst at Gavekal Dragonomics in Shanghai, who regularly reads the Qiushi Journal, a bi-monthly Communist Party publication.’

  • ‘ “But much of it is perfectly readable, and we should know at this point that Xi usually follows through on what he says.” ’

‘While China’s policy moves can feel ad hoc particularly to foreign investors, the changes are quite targeted on certain sectors, said Jason Hsu, founder and chief investment officer of Rayliant Global Advisors.’

  • ‘ “Right now, it feels like throwing the baby out of the bathwater and every industry is at risk,” he said.’
  • ‘ “If you are more aware of what the Chinese has been communicating all along, you know what they will do. Real estate, health care, retirement living -- these are identified by policy makers as undermining societal harmony, and the quality of life.” ’

‘Even while it’s now “fairly obvious” which sectors Xi wants overhauled, “the timing and sequencing of Beijing’s regulatory actions will remain chaotic,” said Jude Blanchette, Freeman chair in China Studies at the Center for Strategic and International Studies.’

  • ‘ “The scope and severity of the current regulatory storm looks obvious only in retrospect,” Blanchette said. “I’m not aware of anyone who read Xi’s 2018 speech on education and said, ‘He’s going to crush the for-profit education sector in three years hence.’ ”
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