August 12, 2021
A month ago, Chinese regulators were zeroed in on the country’s growing fintech industry. Last week, they shifted their attention to the country’s education sector. However, this week they have their eyes set on a new target: video games. Tencent, one of the country’s biggest companies, is suffering badly from it. But Marko Kolanovic of JPMorgan says these concerns should stay local; investors shouldn't worry about spillover into other emerging markets. Rather, most emerging markets are starting to lift as growth, earnings, and vaccine differentials are beginning to line up with the developed world. And even in China, most of the risk is already priced into equities and many may actually be at a discount, historically speaking. But others are saying there is still a higher risk premium in Chinese equities and to underweight emerging markets.
FINSUM + Magnifi: We haven’t reached the bottom of the regulatory barrel in China, but we also think that spillover to broader emerging markets will be limited.
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