Editorial - October



More than a shift to the left, the latest measures to take control of the Chinese administration reflect the ongoing centralisation of power. The Communist Party has a strong hold on the whole of Chinese society, including its economic and financial aspects. So it should come as no surprise that the business community – in all strategic sectors and wherever private companies are relocated – is subject to “corrective” measures as soon as any stance or lack of cooperation shows the slightest divergence from or lack of support for the doctrine of President Xi Jinping.

« The number of billionaires in the People’s Republic of China should also not mask the stated desire for “common wealth”. Reformers tempted by emancipation are therefore marginalised, revolutionary voices which are too tepid are muted. »

Francis Jaisson

In turn, the Chinese champions of the capital markets are subject to a “rectification” campaign, even if it means jeopardising their industrial survival or international competitive edge. The plans are bigger, more global. At a time when Chinese society appears to be one of the most unequal in the world, the Chinese President must urgently refocus China’s growth model on its domestic market. This market is based on the prosperity of a middle class which is exposed to the risks of a disorderly expansion of capitalism. This priority has been dented by the possible bankruptcy of the property developer Evergrande, with the collapse of its share price threatening thousands of individual investors, and, above all, the deposits paid on housing to be built, or the savings products managed by its financial subsidiary. This tension is exacerbated by the liquidity crisis that Evergrande could create by not paying back its banks. The group is the most indebted developer in the world with nearly 300 billion dollars in liabilities.

These liabilities are part of a worrying record of global public and private debt, which is expected to exceed $300,000 billion this year, i.e. nearly 350% of global GDP! The situation is far more alarming for the financial markets than the organisation of emerging countries, which are no longer inspired by our Western models.

Written by
Francis Jaisson

Francis Jaisson, 
Managing director, Head of Asset Management, Marketing, Trading and Research

October 22, 2021

Covéa Finance, a portfolio management company of the MAAF, MMA and GMF groups with share capital of €24 901 254, incorporated as a single-person simplified joint stock company, registered with the Paris Trade and Companies Register under number 407 625 607 and approved by the French Financial Markets Authority under number GP 97 007.

This document is produced for information only and cannot be considered as an offer to sell or investment advice. It does not constitute the basis for any commitment of any kind, nor a strategy assessment or any recommendation to invest in financial instruments. It contains general and non-personalized opinions and analyzes designed by Covéa Finance on the basis of figures that it considers reliable on the day of their establishment depending on the economic context, but the accuracy and validity of which are however not guaranteed. The views expressed in the document are subject to change without notice. Covéa Finance cannot be held responsible for any decision taken on the basis of information contained in this document. This document is the intellectual property of Covéa Finance. Any Use (defined below), reproduction or distribution of all or part of this document must be subject to the prior authorization of Covéa Finance. The recipient of this document is aware of and accepts that the quantified data, allowing the establishment of general and non-personalized opinions and analyzes, may be subject to the acquisition of rights vis-à-vis third parties. Therefore, the encrypted data may under no circumstances be the subject of any use by the recipient of the document without the prior acquisition of the necessary rights directly from the third party holders of these rights. Furthermore, the recipient of this document is aware and accepts that Covéa Finance will in no way be responsible for any use made of said encrypted data and will alone assume all the consequences vis-à-vis third parties who hold the rights associated with this data. "Use" is understood as, and without limitation, the manipulation of encrypted data, distribution, redistribution, integration into an information system or into documents of all types.