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Why investors shouldn’t overreact to China’s market rout

There has been a series of regulatory changes in China since 2019, mainly taking place in new economy sectors, first with gaming, then fintech, and now private education. On July 23, Beijing announced new rules barring for-profit tutoring in core school subjects to ease financial pressure on families. These regulatory measures have had a major impact on the equity market especially for the affected industries, though the short-term macro impact has remained limited.