Conversation

Which sectors will China’s crackdown target next? That’s the question on everyone’s minds. Here’s my stab at it… 👈 1/11
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Gambling. Gambling is a social harm and doesn’t produce anything useful. It’s especially bad because all Chinese people love gambling. This could impact stocks like Wynn Macau, MGM China, Galaxy Entertainment. 2/11
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Nightlife. Nightlife such as KTV, bars, clubs, and similar are dens of debauchery and conspicuous consumption. They also highlight inequality. These are likely to be candidates for rectification soon. Mostly listed outside of China, like Magnum. 4/11
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Foreign pop culture. “Idol culture” and similar obsessions are seen as an unhealthy mindset for the Chinese people. These types of cultural products are likely to be repressed. SM Entertainment, HYBE, etc. 5/11
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Overseas tourism. Holidaying in a foreign country is environmentally unfriendly and an unproductive waste of money. This kind of consumption is opposite to the goal of “dual circulation”. Foreign tourism stocks, airports would be examples of affected companies. 6/11
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Tobacco. The harmful health effects of tobacco is apparent by now, and its revenue is far lower than the medical costs associated with smoking. Tobacco for adults is like video games for teenagers, and we’d expect this to be repressed soon. 7/11
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Golf. Golf is environmentally unfriendly and a waste of land. With the social unrest caused by unfair land seizures, we can’t expect golf to be unscathed. It’s also associated with flashy entrepreneurs and corruption. 8/11
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Unhealthy food and drink. Sport and health are big themes promoted by Xi. Junk food is directly opposite to these aims. Expect storms ahead for companies like Coca-Cola, Master Kong, and so on. 9/11
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Alcohol. Alcohol is unhealthy drink, and some of the more high-profile plays like Kweichou Moutai are also associated with conspicuous consumption, bribery, and corruption. Expect these to be shut down harshly. 10/11
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Eldercare. People past productive working age do not produce useful goods or services for the country, are a drain on the economy, and squander scarce medical resources. Those at risk include hospices, long-term care, and financial and insurance providers. 11/End
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