Her investment briefing yesterday went to some lengths to explain the context of these interventions that many saw as heavy handed.

At the heart are shifting economic priorities specifying that "development should result in greater benefits for the everyday lives of citizens as opposed to merely chasing impressive headline GDP figures,” Cheung wrote.

A top priority for China is reversing a shrinking and ageing population by reducing education costs and finding policy levers to promote family growth.

“Education expenses, particularly after-school tutoring, is a significant factor for many families to consider when having children. The legal basis of the recently-released Double Reduction education policy started in 2018 and involved different stakeholders in the drafting process," she said.

The framework was finalised three months ago and released in late July but, she said, it should have minimal market effect as the sector accounts for just 0.7 per cent of China GDP.

In the longer term, changes to education could help alleviate high costs, help raise children into the middle class, free-up more consumption spending, and foster more diversity in the sector, she said.

China's Internet sector
Since the Chinese government put a stop to Ant’s highly anticipated listing last year, regulators have also stepped up surveillance of China's internet giants. Areas under scrutiny relate to banking, anti-trust, data security, and social equality.

The changes, which mainly relate to improving employee benefits, cybersecurity, and curbing monopolistic power, should have limited market impact, she said. "Enhancing protection for employees and customers may lower the overall social risks associated with the sector. A reduction in the monopolistic tactics of internet platforms should also foster market competition and spur economic innovation,” she said.

Oversight of China's real estate sector has also been building over several years. The phrase “houses are for living in not speculating on” is being repeated at high-ranking government meetings, Cheung wrote, with resulting policy changes aimed at curbing profiteering in the sector.

“The average mortgage-related loan-to-value ratio (LTV) in the Chinese banking system is around 50 per cent, and the excess leverage from shadow banking and P2P lending has reduced in the past few years," she said. The People’s Bank of China also performed real estate-related stress testing for the banks in the second half of 2020 to ensure that the system can weather a potential correction, she added.

Broader Asia
Although all markets in the Asia-Pacific region are on track to exceed the global compound annual growth rate (CAGR), China and Korea stand out, with their CAGR expected to reach double digits, according to Cerulli forecasts.

At least 1,300 funds were launched in China in 2020, and RMB3.1 trillion ($475 billion) in assets have come through initial public offerings. A second wave of the pandemic in India in March could see investors sticking with safe and liquid assets, Cerruli said. China and India are set for the biggest growth over the next five years.

A recent trend has been of international banks and wealth managers setting up joint ventures or obtaining various licences to manage funds for onshore Chinese investors. Earlier in August, for example, BNP Paribas won a licence in China to provide custody services for China’s Qualified Foreign Investor (QFI) scheme, which allows it to work directly with foreign institutional investors. In May 2020, Chinese authorities scrapped investment quotas on qualified foreign institutions. Qualified Investors no longer need to apply for any investment quota from the State Administration of Foreign Exchange, aka SAFE. Qualified investors may choose currencies and the timing of inward remittance on their own decisions.

Pictet Asset Management, part of Swiss private banking group Pictet, was awarded a Renminbi Qualified Foreign Institutional Investor quota by China as far back as 2015. Other firms such as JP Morgan, Baring Asset Management, Ashmore Group, BlackRock and BNP Paribas have received quotas.