J.P. Morgan: Regulatory tightening has weighed on Chinese stocks this year

J.P. Morgan: Regulatory tightening has weighed on Chinese stocks this year

August 30, 2021

China
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Having outperformed other regional stock markets for much of the pandemic, regulatory tightening has recently driven sharp declines in Chinese stocks.

In the technology sector, Beijing is taking steps to address inappropriate use of market power and to increase market competition. The education sector has also seen substantial changes, with policymakers now viewing after-school tutoring as a key social policy challenge given its impact on child welfare and falling birth rates.

As we discuss in our latest On the Minds of Investors publication, further reforms may still follow for new economy sectors that are politically or socially sensitive. Yet short-term volatility has not fundamentally changed the long-term investment opportunity in China, centred around technological innovation and the domestic consumer.

Major efforts to open up Chinese capital markets to foreign investors continue, and we expect this to remain a priority going forward.

Index level, rebased to 100 in January 2020

3008 J.P. Morgan

Source: MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Data as of 25 August 2021.

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