How to Think About Macro and Policy Risks in China (Part Two)

And integrate them into the investment process

In China, policy support does not guarantee an industry’s success. But a government crackdown will almost certainly kill an industry. Therefore, policy and regulatory research is more suited for risk management and downside protection.

This is a sequel to my earlier post on analyzing Chinese macro risk. Today we discuss the regulatory / policy risk in more detail. You may also want to check out my other posts on the same topic:

• A summary of our China regulatory webinar (September 4, 2021)

• My initial thoughts on the Didi case (July 9, 2021)

• The real risk of investing in Chinese ADRs (part one and part two)

As noted, our policy research serves as a plug in risk management, a reality check that whatever sectors, themes or companies we invest in are not against the government policy. There is probably no convincing needed right now, following the regulatory storm in Internet, education and real estate last year.