In the past few months, China has repeatedly been in the news with a series of regulations or restrictions on the economy. Stock prices were falling, the euphoria fading. “In the meantime, China has been oversold and the regulatory regime provides more security and attractiveness in the long term”, said Carsten Gerlinger, Managing Director and Head of Asset Management at Moventum AM.
The technology sector in particular has come under scrutiny from Chinese authorities. IPOs had to be cancelled, companies were broken up, and booming crypto-mining companies were deprived of much of their basis. “While this sounds like a blow against the private sector by the Communist Party, the opposite is the case”, Gerlinger pointed out. China’s leadership is drastically rebuilding the country. Instead of serving as the world’s workbench, its national economy is set to become the global technological and economic leader. Electro-mobility is just one example that demonstrates how far ahead China is already in some areas compared to Western states.
“The steps adopted by the government now are not intended to damage the private sector”, Gerlinger highlighted. Rather, they are an adjustment to Western standards in terms of regulation. “For years, internet platforms and e-commerce were allowed to grow almost unregulated and unsupervised in China”, said Gerlinger. “This led to industry growth rates that were significantly higher than those in the US, for example.” Now loopholes are being closed that have also long been criticised by many Western nations.
Overall, however, competition within China is also becoming fairer in international comparison. “This is a development that will tend to have a positive effect in the long term”, Gerlinger explained. “And the Chinese leadership also wants to send a signal internally, of course, to show who is master in the house.” After all, the more freedoms citizens are getting and the more liberties companies are taking, the more the influence of the Communist Party is shrinking. “This is where the leadership wanted to counteract – and it succeeded in doing so”, said Gerlinger.
Many companies’ stock prices were falling, investors avoided the Chinese market. “A mistake”, according to Gerlinger. “In the long term, the region is important as a growth engine for the global economy; Chinese consumption alone is probably still decades away from peaking.”
Additional information is available at www.moventum.lu
Über Moventum S.C.A
Moventum Asset Management S.A. (Moventum AM) is a wholly owned subsidiary of Moventum S.C.A. Since 2019 Moventum AM manages Moventum’s own funds of funds and individual mandates as part of its asset management portfolios.
As an independent financial service partner, Moventum S.C.A. has been providing a home for financial service providers such as advisors and asset managers as well as institutional clients from all over the world for more than 20 years. The digital "MoventumOffice" platform offers access to more than 10,000 funds, ETFs and other securities. In addition, it allows financial advisors to open securities accounts for their clients, to place trading orders and to use analysis, reporting and support tools. Institutional clients are able to outsource their entire fund trading with complementary services to Moventum as part of collective or individual custody account management. A variety of fund services are assumed for asset managers, ranging from registrar and transfer agent services to fund accounting, company administration and domiciliation services.
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