RAYC - Long View On China

• China’s economic achievements have caused growing tensions between the country’s socialist political and ideological goals and growing capitalist (profit-led) economy.
• Chinese leadership is also concerned about the threat that has arisen from the amount of power accumulated by some platform companies.
• Also playing a role in the regulatory crackdown is a deepening rivalry between the United States and China, in our view.
• We believe the market may have become too sanguine regarding China’s country risk, and with the recent market correction, the implied ERP has risen back to its long-term average.

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