China will tighten regulation to ensure balanced growth

China will focus more on regulation in the coming years. This was demonstrated last night by the new five-year plan presented by the rulers in Beijing.

Beijing will focus on security, technology and monopolies.

With these new plans, investment manager Nathan Levy of ING continues to show “caution” with Chinese shares.

“Legislation is being tightened up in sectors ranging from nutrition and medicine to ‘big data’ and artificial intelligence. All this with the aim of a better life for the Chinese people. The (political) risk thus remains above the market, leading to higher risk premiums for Chinese shares”, Levy stated.

“The Chinese Banking and insurance watchdog has instructed companies and local agents to curb inappropriate marketing and pricing practices and to increase user privacy protection,” says economist Jim Reid of Deutsche Bank. Anyone who does not follow the rules could face “severe penalties”, Reid said. And according to The Economist, that puts pressure on Chinese stocks.