13 Dec 2021: Are Chinese Tech regulations coming to an end?

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In the recent central economic work conference held by senior members of Chinese authorities, there has been a few major points being discussed. One that is well-reported by the media is the use of stabillity word in the report. Chinese markets post the work conference reacted positively, with the Shanghai index and Shenzhen index all testing recent high seemed awhile back...

The key question to ourselves is whether the Chinese tech regulations coming to an end, which would give a boost to the Chinese tech stocks listed in Hong Kong and US. So far, from how I read the situation, the end is not here for the regulations as there is still an emphasis of anti-monoply, with a emphasis on the need to encourage more innovation and fairer competition to encourage entrepreneurship.

So what does it leave to us? If you watch my youtube video on Renminbi internationalisation as well, you would note that opening up the financial markets in China will not stopped... This is a trend that will not be reversed easily.... This means RMB strength against USD may well continue again despite the increase in foreign deposit reserve requirement in Chinese banks in China.. Even lowering rates in China (unlikely to be too aggressive), is unlikely to swerve this strength... This is something that the PBOC officers will come to a conclusion soon (at least this is what I feel)..

The emphasis on relying on internal domestic demand to help China's GDP is also a goal... With COVID situation, including the recent Omicron saga, it comes as no surprise that this will be the case since other economies growth may not be as optimistic as what the rest of the world would hope for!!! But all in all, to encourage internal domestic consumption, a too strong RMB may encourage imports from other countries... so what can we read from this？

There leaves us to a conclusion that a too strong RMB will not be well-liked by the Chinese authorities.. However, if a too strong RMB trend continues, the hands of the regulators in China may be tight such that they would adopt a less aggressive approach towards Chinese tech companies.. So all in all, regulations will continue but albeit not as aggressive as we had seen during the period from July 2021 to October 2021.

Will I be right? We will let time determine it but at least I think there is a chance for a bottom to be formed soon for the Chinese tech stocks or at least it is already over... Nevertheless, it is important to manage one's portfolio from a portfolio perspective so as to avoid a spillover of a market crash in US equities should this happen.

An inverse relationship hypothesis that I am predicting for Chinese and US stocks... Will this happen too?

We shall see.