Emerging & Global Markets Catch Up With Reality (Krane Shares)

[NOTE: This is from mid-November – so its already dated but the points below are worth noting.]

  1. First, we have seen very little internet regulation over the summer, confirming a possible end to reforms.
  2. Second, the China Securities Regulatory Commission (CSRC) and the Securities Exchange Commission (SEC) have signed a statement of protocol allowing the Public Company Accounting Oversight Board to conduct full audit reviews of US-listed Chinese companies, which should lift investor sentiment toward China.
  3. US officials are currently in Hong Kong auditing the data of more than 160 Chinese companies. We believe all the major internet companies will pass the test and help to establish a path to the final agreement.
  4. Third, we believe the conclusion of the National Party Congress (NPC) on October 22nd,5 may allow leaders to focus on supporting the real economy once again and potentially pursue more easing of China’s zero COVID policy.
  5. Fourth, CSPC Pharma, China’s third largest pharmaceutical company, announced favorable numbers for their mRNA COVID vaccine, potentially leading to emergency approval as soon as November.
  6. Lastly, for the first time since 2019, China brought back the Pledged Supplementary Lending (PSL) program in October. The program was created in 2014 and is meant to capitalize policy banks to support the property sector. The return of the discontinued program indicates that China is looking to bring the real estate sector under control in the near term and protect against systematic risk. READ MORE

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