China's regulatory actions on the education and training industry have led to a sharp plunge in Hong Kong stocks and US-listed companies, and caused a wave of collective plunges in Chinese stocks. Earlier, it was reported that the fund owned by ARK Invest, owned by "wooden Sister" Cathie Wood, had sold a lot of shares in Chinese companies and even completely liquidated its positions. However, Wood said recently that the Ark has not closed the door to Chinese companies and that she has found some attractive companies in the field of innovation.

In addition to the accelerating digitization of the health care industry, China has also vigorously promoted the development of the renewable energy and electric vehicle industries, and some investors have seen opportunities.

As the panic caused by the "double reduction" policy calms down, Wall Street's understanding of China's regulatory policy is more calm. Morgan Stanley believes that the Chinese government's aim is to eliminate rising income inequality, encourage consumption and ultimately promote higher economic growth. In the process, policymakers need to strike a careful balance between the vision of a transition to a consumer economy and the danger that regulatory policies could hamper overall economic growth.

China's online health care will account for half of the number of visits within five years.

According to a research report released this week by Ark Investment, the digitization of China's health care industry will bring huge opportunities, which will give some companies a great boost. ARK Autonomous Technology & Robotics ETF (ARKQ) and ARK Fintech Innovation ETF (ARKF) of Ark Investment still hold shares in relevant Chinese companies.

Although China has achieved full digitization in areas such as e-commerce, mobile payments and food distribution, health care has always been an exception. Yulong Cui, an analyst at Ark Investment, wrote in a report: for a long time, China's health care system has been heavily burdened and high-quality medical resources are scarce. Of the 30,000 hospitals in China, the largest and best quality hospitals account for less than 10%, but they accept more than half of the country's visits. Patients sometimes have to wait a few days before they can be treated by the most experienced and famous doctors.

In addition, China's medical institutions are seriously underfunded, and medical expenditure accounts for less than 7% of GDP, which is lower than that of most developed countries, mainly due to the low reimbursement rate.

As a result of these problems, Chinese doctors are under great pressure at work, but their income is much lower than that of doctors in western countries, which is also one of the reasons for the tense doctor-patient relationship.

Cui wroteDigital transformations can alleviate some of the problems, including online counseling, artificial intelligence-assisted clinical support systems, digital medical applications, prescription drug delivery and specialized care platforms.Doctors will be more efficient and patients will be better taken care of.

Relevant policies have been launched one after another. Cui pointed out that since 2015, China has made a series of policy adjustments to guide more medical services to the line. Not only will the new bill allow prescription drugs to be sold online for the first time, but the reimbursement rate for online medical consultations will also be raised to the same level as that of hospitals.

All this means thatThe acceleration of digitization in China's health care industry may soon reach an inflection point.. Ark Investment estimates that online medical advice is likely to increase significantly, accounting for 50 per cent of all medical advice by 2025, up from 6 per cent in 2019, meaning the market will grow more than 30-fold from $1.5 billion to $50 billion.

Ping An Healthcare And Technology (1833.HK)、BABA (BABA)和JD.com (JD)Have launched their own digital health service platforms. WeDoctor, backed by Tencent, plans to go public in Hong Kong Exchanges and Clearing later this year.

As of August 13, JD.com ranked 10th with a position weight of 2.95% in ARK Autonomous Technology & Robotics ETF (ARKQ). Other Chinese stocks included Baidu, Inc. (2.5%), Niu Technologies (1.74%) and BYD (1.04%) BABA (1.02%). In ARK Fintech Innovation ETF (ARKF), the weight of JD.com is 1.89%, Tencent is 1.17%, Meituan is 1.12%, Ping An Healthcare And Technology is 0.87%, and BABA is 0.75%. Ark also invested heavily in US telemedicine stocks such as Teladoc Health (TDOC), indicating that the company is optimistic about the industry.

Market forecasts for the development of new energy and electric vehicles in China are still too conservative.

In addition to the opportunities in the healthcare industry, some investors see opportunities as the Chinese government accelerates the development of industries such as renewable energy and electric vehicles and expands their global leadership.

There are already investors buying.Longji shares (601012)和Leading Intelligence (300450)Stocks that are not well-known in the global market at present.

For a decade, China has been developing renewable energy and electric vehicle industries. In September 2020, China set a carbon emission target and plans to achieve a carbon peak by 2030 and carbon neutrality by 2060.

Alex Whitworth, head of Asia-Pacific Power and Renewable Energy Research at Wood Mackenzie, a consultancy, said: "our expectations for new solar installed capacity in China over the next 10 years have nearly doubled because all sectors of Chinese society are trying to achieve these goals. "

Andrey Glukhov, emerging markets portfolio manager at TCW, said the Chinese government's macroeconomic policies were in line with the development of electric cars and solar / wind power, and that the growth potential of these sectors may have been underestimated. "No matter what forecasting model we build, it is likely to be too conservative," he said.

Whether it is electric car sales or solar module production, China is in the lead in most relevant indicators. "there are solar farm operators all over the world, but China controls the supply chain," said Mubashira Bukhari Khwaja Khvaja, Aberdeen Standard Investments investment director. "

Investors have noticed this. The KraneShares MSCI China Clean Technology Index (KGRN) has risen 80 per cent over the past year.

To get further gains, investors may need to be more stock-picking. Some fund managers are not enthusiastic about the largest companies in the KraneShares MSCI China clean technology index, such as BYD, even though they sold two to three times as much in July as they did in 2020.

The battery field is getting more attention.Ningde era (300750)It is in a leading position in China's domestic market and is overtaking its South Korean competitors in the global market. "there has been a lot of improvement in competitiveness in the Ningde era," said Vivek Tanneeru, portfolio manager at Matthews Asia ESG Fund. "

A secondary supplier worth paying attention to isEnjie shares (002812)The company specializes in producing diaphragms to prevent batteries from short-circuiting.

Gruhoff and Khvaja agree that the best investment in solar energy is also in the "middle reaches" of component makers, not generator makers. Khvaja is optimistic about Longji, the leading company in the photovoltaic industry and the production of inverters in the industry.Sunlight Power supply (300274)。

Some China watchers say such industries are closely linked to China's national interests and should be greatly enhanced, becoming a huge driver of economic growth and helping to boost China's position in science and technology.

China's supervision is intended to solve the "three mountains" of people's livelihood.

The market capitalization losses caused by the Chinese government's overhaul of industries such as education and technology are obvious, but the vision that the government hopes to achieve is another issue that needs to be discussed.

Morgan Stanley (Morgan Stanley) believes that common prosperity is a vision that the Chinese government wants to achieve, Barron Weekly reported recently. The aim of the Chinese government is to eliminate rising income inequality, encourage consumption and ultimately promote higher economic growth, the investment bank said.

Morgan Stanley said that decades ago, Chinese policy makers encouraged investment, especially in the industrial sector, to create jobs. Chetan Ahya, an analyst at the investment bank, points out that China's fixed asset investment accounted for 42 per cent of GDP in 2020, up from 24 per cent in 1990.

Although China's per capita income has increased substantially, there is income inequality. Addressing income inequality and increasing household income as a share of GDP will help achieve the goal of releasing more purchasing power through economic rebalancing, Mr Ahya said.

Due to the lack of health care, education and housing resources, Chinese households are more inclined to save, so the government has been trying to solve these livelihood problems known as the "three mountains". "Ahya said.

The overhaul of the education sector is part of the government's efforts to achieve a broader goal of reversing the decline in the birth rate by reducing the cost of raising children.

The flip side of all this, however, is that increasing household income as a share of GDP comes at the expense of corporate profits. If wages rise, the profits of the companies that pay them will fall.

Mr Ahya insists that the equity risk premium, the extra return that investors demand for holding risky stocks, will remain relatively high.Industries such as technology that were initially allowed to grow and expand through investment are likely to continue to face regulatory action as actions against them may be seen by policy makers as a way to promote a shift to household consumption.