After record-breaking Chinese investments in 2016, the Chinese government started to pull their financial reins, ahead of a major political decision making conference this Autumn. For investors reading political tea leaves has become as important as analyzing the stock markets, says business analyst Shaun Rein in the South China Morning Post.
The South China Morning Post:
While there’s no suggestion of wrongdoing, the heightened scrutiny of the companies underscores Beijing’s new attitude towards overseas mergers and acquisitions by private companies.
The number of major overseas asset purchases by mainland companies plunged by 80 per cent in the first quarter, as Beijing tightened controls on capital outflows and ratcheted up scrutiny into deal funding.
“Investors right now have to be political experts as much as valuation and financial ones – the political risk now is the highest I’ve seen in the 20 years I’ve been in China,” said Shaun Rein, founder of China consultancy Market Research Group, based in Shanghai.
China experts said the latest administrative measures pointed to the Beijing’s commitment to reduce financial risks ahead of an important political meeting this autumn.
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