3 reasons why China is on discount

China is today paying the consequences of multiple negative events or decisions that negatively impacted the confidence of international investors.

For several years now, the Chinese government has communicated restrictions in the technology sector (cybersecurity, market access for foreign companies), the real estate sector (restrictions on property purchases), the education sector (restrictions on after-school tutoring companies and limits on foreign investment in certain education-related businesses), the gaming sector (restrictions on the amount of time minors can spend playing online games). If we add the antitrust investigation on Alibaba in 2020 and the suspension of the IPO of the Ant... group... or the extended blocking period until mid-2022 in Shanghai and Shenzhen, China has completely destroyed the confidence of international investors.

However, and despite recent economic headwinds, we see the Chinese market in a deeply oversold situation with extremely low valuation after a long period of underperformance. A lot of negative news seems to be already in prices.