Week in review

• South Korea GDP rose 5.9% y/y in line with expectations
• U.S. Federal Reserve policy was left unchanged
• U.S. 2Q GDP rose by 6.5% y/y, below consensus

Week ahead

• China manufacturing and services PMI
• U.S. employment report
• Bank of England monetary policy

Thought of the week

It was a volatile week for Chinese equities, with the CSI 300 Index falling by more than 6% from last week. The key driver for this sell-off were the new reforms to the private education sector, which prompted investors to worry that there will be further regulatory interventions in various sectors. However, we believe that the actions taken on the education sector does not set a widespread precedent for other sectors, nor do they indicate Chinese policymakers’ broader intentions towards the operations of private sector companies and the use of foreign capital. Chinese policymakers’ efforts to reassure investors, including injecting liquidity and also communicating that overseas listings for Chinese companies will continue to be allowed, also supports this belief. Overall, we retain our long-term positive stance on Chinese equities, and continue to advocate for diversification within Chinese equities to navigate the evolving regulatory landscape.

CSI 300 Index

Price Level

Source: China Securities Index, FactSet. Data reflect most recently available as of 30/07/21.

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