Hong Hao: China silences prominent market analyst as economic downturn deepens

On the weekend, ten cents (CEGI) WeChat has frozen the public account of Hong Hao, a well-known market analyst in China. The move came after he posted on social media about a massive outflow of capital from the country and made bearish forecasts for the Chinese stock market.

Hong is the Managing Director and Head of Research at BOCOM International, the investment banking division of Bank of Communications, a state-owned bank and China’s fifth largest bank.

“All content is blocked. The user is prohibited from using the account,” the message posted on the WeChat account reads. He added that the account “violated” government internet regulations, without elaborating. It also did not specify which post led to the suspension.

Hong’s account Weibo (WB), which had over 3 million followers, was also removed. A search for the CNN Business account resulted in a message that the user “doesn’t exist anymore”.

Covid lockdowns have taken a heavy toll on the world’s second largest economy. The latest government survey data, released on Saturday, shows manufacturing and services activity fell to its lowest level since February 2020.

Beijing’s anti-COVID-19 policy, coupled with a crackdown on big tech, a downturn in the real estate market, and the risks posed by Russia’s war in Ukraine, has fueled an unprecedented outflow of capital from foreign investors in recent months. The yuan recently fell to its lowest level in 17 months.
In recent days, Chinese leaders have repeatedly pledged economic recovery. President Xi Jinping on Tuesday called for increased spending on infrastructure to spur growth. And the Politburo of the Communist Party promised on Friday “concrete measures” to support the Internet economy.

Hong and BOCOM International did not respond to requests for comment regarding the social media suspension. Weibo didn’t respond either.

He is not alone in expressing growing concern about the state of China’s economy and markets.

Shang Weijian, founder and chairman of Hong Kong private equity firm PAG, recently criticized the government for policies that have led to a “deep economic crisis,” according to data Financial Times, citing comments he made in a meeting with brokers. PAG did not respond to a request for comment.
Foreign investors are turning away from China.  War in Russia - the latest trigger

Chinese regulators have stepped up scrutiny of social media amid growing public discontent over Covid lockdowns in the country.

On the move to reduce the anonymity of people onlineOn Thursday, Weibo told users it would start posting IP addresses on their account pages and when they post comments to combat “bad behavior.”

Chinese tech giants have been suppressing people who speak negatively about the economy since last year. In October, Tencent suspended more than 1,400 WeChat accounts after the government cracked down on online messages it said were hurting the economy.

Tencent said in the reports made bearish statements about financial markets, “misrepresented” the interpretation of economic policy, or spread rumors. Among them was the public account of Chen Guo, chief strategist at Essence Securities in Shenzhen.

Likely trigger for blocking social networks?

It’s not entirely clear which of Hong Hao’s posts caused the latest ban.

The latest reports posted on his public WeChat account were titled “Beware of Capital Flight” and “What Chinese ADRs Should Be Worried About”. ADRs are securities issued Chinese firms are registered in the US.

After Didi's failed IPO, China is looking to expand its control over overseas listings.
In these reports, Hong warned of foreign investors dumping Chinese stocks and drew attention to the worst capital flight since the start of the pandemic. He also blamed Chinese tech crackdowns, not new US foreign listing rules, for causing the epic sell-off in Chinese ADRs in March.

In another note on March 21, Hong also predicted that the Shanghai Composite would fall below 3,000 points.

Last Monday, the Shanghai Composite index fell below 3,000 for the first time in 21 months as a rise in Covid-19 cases in Beijing sparked fears that the Chinese capital could join Shanghai and other major cities in lockdown.

China’s stock market this year is the second largest in the world after Russia, according to Refinitiv Eikon.

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