July 30 2021
1. Chinese education…
China unveiled a sweeping overhaul of its >$100 billion education sector last Saturday, banning companies that teach the school curriculum from making profits, raising capital or going public. As a result, Education stocks plunged between 60-70% in one day! Online education platforms had attracted over 100bn yuan (AUD $20bn) of capital in 2020 alone, according to iResearch.
The regulatory assault has been attributed to the government’s perception that private tuition is contributing to social inequality and rising costs of education, impacting child birth decisions. As a reminder, in May China said it would allow couples to have up to 3 children, from 2 previously.
It sends a warning signal for other public service providers that may reduce social equality, or firms breaking out from the ‘sustainable competition’ requirements…
2. You can travel and trade!…
It may be hard to comprehend from an Australian perspective right now, but in the US, travel spend is back to normal according to Bank of America card spend data. Meanwhile, despite the reopened economy, retail investors put >$2bn into the market on Tuesday, according to Vanda Research, and equity ETFs have seen more net inflows in 2021 than any previous full year.
Source: BofA Global Research
Source: Vanda Research
3. The Covid ‘cleanse’…
Data from the OECD/Accenture and Xero has shown the ‘cleansing effect’ Covid has had on small businesses. That is, employment in the least productive firms has suffered the most. This cleanse comes as the M&A market remains hot. Australia has had a record quarter of announced deals, and we aren’t even 1 month into it yet!
Source: OECD, Xero, Macquarie Macro Strategy
Announced M&A deals (Australia), by quarter
Source: Bloomberg, Bell Potter