Investor fears about Xi's new leadership team 'may be misguided' - CNBC

BEIJING — Chinese stocks' plunge connected Monday implicit fears astir China's caller enactment squad "may beryllium misguided," consulting steadfast Teneo said.

Chinese stocks successful Hong Kong and New York, especially net tech giants specified arsenic Alibaba, dropped connected the archetypal trading time aft Chinese President Xi Jinping cemented his steadfast grip connected powerfulness with a new halfway enactment squad filled with his loyalists.

Over the past respective years, Xi has shown a penchant for greater authorities engagement successful the economy.

"Close relationships with Xi notwithstanding, Li Qiang, Li Xi, and Cai Qi each participate the [Politburo lasting committee] aft heading up affluent provinces wherever economical maturation is inactive the apical priority," Teneo Managing Director Gabriel Wildau and a squad said successful a note.

The Politburo lasting committee is the highest ellipse of powerfulness successful China.

Li Xi has led the export-heavy state of Guangdong arsenic enactment secretary, portion Cai Qi held the relation for the superior metropolis of Beijing.

Li Qiang, apt to go the adjacent premier, oversaw stringent Covid lockdowns successful Shanghai this twelvemonth successful his relation arsenic enactment caput of the city.

However, analysts specified arsenic Nomura's Chief China Economist Ting Lu pointed retired that Li Qiang "has extended acquisition successful managing immoderate of China's richest and biggest provincial economies" — Zhejiang, Jiangsu and Shanghai.

"Mr Li has been wide regarded arsenic a susceptible pro-market and pro-growth politician," the Nomura study said.

"Mr Li suffered immoderate setbacks during the Omicron question successful outpouring this year, erstwhile the full metropolis of Shanghai was enactment nether a restrictive afloat lockdown. However, during astir of 2020 and 2021, Shanghai nether Mr Li's governorship was perceived arsenic a relation exemplary for achieving a tenable equilibrium betwixt Covid containment and economical growth."

Analysts besides pointed retired the promotions of He Lifeng, caput of the National Development and Reform Commission, and securities regulator caput Yi Huiman.

He Lifeng volition apt "succeed the retiring Liu He arsenic vice premier and manager of the party's Central Financial and Economic Affairs Commission," Teneo analysts said.

"Though He lacks Liu's technocratic expertise, He's grounds besides suggests a beardown absorption connected economical growth," the study said. "In an nonfiction past year, He wrote that economical improvement was the 'number 1 task' and the instauration and cardinal to solving each our country's problems.'"

Xi's code astatine the opening of the Chinese Communist Party's 20th National Congress this period emphasized that China volition absorption connected "high-quality development" and "modernization" successful the coming years.

Common prosperity — mean wealthiness for all, alternatively than conscionable a fewer — is simply a request for that modernization, Xi said.

Analysts person said China's renewed pursuit of communal prosperity contributed to Beijing's caller crackdown connected net tech giants.

Chinese officials person signaled that the crackdown is nearing an end. In July, a Politburo gathering readout said officials called for the continued "healthy" improvement of the "platform economy" and "completing" the businesses' adjustments.

The enactment legislature that ended implicit the play did not awesome whether China's stringent Covid controls would beryllium changed soon. The restrictions connected concern enactment person weighed connected economical growth.

However, Bank of America China and Asia Economist Helen Qiao and a squad said successful a enactment Monday that Covid argumentation changes could hap sooner than the marketplace expects.

"In our view, the completion of the [party congress] volition alteration the apical enactment to determination connected to the adjacent argumentation docket soon — relaxing the Covid curbs," the study said.

The analysts said immoderate mightiness interest astir the caller radical of leaders' deficiency of checks and balances, and the hazard of argumentation mistakes that daze the economy.

But they added that the group's solidarity "may pb to much effectual argumentation execution" for the state overall.

— CNBC's Michael Bloom contributed to this report.