No ‘Adults in the Room’: Xi Jinping Catches Global Investors Off Guard (FT)

• Exclusion of moderates from China’s leadership spurs record stock outflows
• Analysts and fund managers had expected Xi to balance his seven-man leadership team by including at least a couple of moderates. Instead, it became clear that he had taken sole charge of the world’s second-largest economy. “Investors were imagining a scenario where Xi basically got his own way, but there would still be some adults in the room with some kind of pro-market pushback,” said Thomas Gatley, an analyst at Gavekal Dragonomics in Beijing.
• Gatley at Gavekal pointed to China’s education industry as an example of what can happen when there is no pushback against punitive policymaking.
• One fund manager who divides his time between the US and Asia said he would no longer invest in any Chinese companies after the party revealed its new leadership line-up. “[Xi] purged all the competent people who knew about how to grow the economy with a bunch of puppets,” the fund manager said. “I think there were still people who were hoping that this was just a cyclical phase to ensure his third term, but the purge fully demonstrated this is a permanent ideological shift, and there’s no turning back.” READ MORE

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