Investors around the world will be closely following China’s National People’s Congress (NPC), which kicks off this weekend, for signals about which sectors are likely to benefit from President Xi’s latest political and economic developments.
The NPC is one of the most important political events in the world’s second-largest economy. It is the annual meeting of the highest organ of state power and the country’s top legislative body.
Investors always closely watch the NPC for any indicators about changes in economic policies that could impact financial markets and business in China – but this year’s event is more critical.
This is the first NPC since China has moved away from its zero-COVID policy to combating the pandemic. It also comes as Xi tightens his grip on power.
Global investors will be looking for signals on China’s policy priorities and goals, and potential opportunities and risks.
There are likely to be five sectors that could benefit from the latest policy agenda to be set out this weekend.
First, tech. China’s focus on innovation and tech has been a major theme in previous NPC events. Beijing has committed to increasing investment in areas such as artificial intelligence, semiconductors, and 5G.
Domestic and foreign companies involved in these sectors could receive increased government support.
Second, infrastructure. The NPC typically includes rhetoric about infrastructure investment, including plans for new roads, railways, amongst other public works projects.
Third, health care. China’s aging population has led to increased demand for healthcare services, and the government has made improving healthcare a priority, including further investment in areas such as medical research, new hospitals and pharmaceuticals.
Fourth, renewable energy. Beijing has set ambitious targets for slashing greenhouse gas emissions, and the NPC often includes highlights on how it aims to achieve these targets.
Fifth, consumer goods. As China’s middle class continues to grow, there’s increasing demand for quality consumer goods. Entities involved in areas such as retail, luxury goods, and e-commerce will benefit from increased consumer spending.
Last week, President Xi encouraged bankers in China to "clean up" their Western lifestyles and be less "hedonistic."
This reflects his wider aim to promote traditional Chinese values, tackle corruption, and maintain social stability and a more modest way of life.
The importance of this event for global investors, which will shape the world’s second-largest economy, cannot be overestimated.
London-born Nigel Green is founder and CEO of deVere Group. Following in his father’s footstep, he entered the financial services industry as a young adult. After working in the sector for 15 years in London, he subsequently spent several years operating within the international space, before launching deVere in 2002 with a single office in Hong Kong. Today, deVere is one of the world’s largest independent financial advisory organizations, doing business in 100 countries and with more than $12bn under advisement. It specializes global financial solutions to international, local mass affluent, and high-net-worth clients. In early 2017, it was announced that deVere would launch its own private bank. In addition, deVere also confirmed it has received its own investment banking license.
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