All eyes are on the recent tightening of regulations for tech and education companies by Beijing and on possible new measures that could affect other sectors. Under this regulatory pressure, the Chinese market has underperformed both MSCI DM and MSCI EM indices following a strong performance in 2020.
In the short term, China’s regulatory tightening could be challenging and may include restrictions on companies listing overseas using the Variable Interest Entity (VIE) structure. Furthermore, in autumn 2022, the Chinese Communist Party (CCP) will hold its 20th National Party Congress, adding uncertainty over new policies.
