China silences prominent market analyst as economic slump deepens

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Over the weekend, Tencent’s (TCEHY) WeChat froze the public account of Hong Hao, managing director and head of research at BOCOM International, the investment banking arm of Bank of Communications, a state-owned bank and China’s fifth largest.

“All content has been blocked. The user is banned from using the account,” a notice posted on the WeChat account said. It added that the account had “violated” government’s internet rules, without going into details. It also did not specify which post had led to the suspension.

Hong’s account on Weibo (WB), which had more than 3 million followers, has also been removed. A search by CNN Business for the account resulted in a message stating that the user “no longer exists.”

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

Beijing’s zero-Covid policy, coupled with a crackdown on Big Tech, a real estate slump and risks related to Russia’s war in Ukraine, has triggered an unprecedented flight of capital by foreign investors in recent months. The yuan recently plunged to its lowest level in 17 months.
Chinese leaders have made repeated reassurances in recent days about fixing the economy. President Xi Jinping on Tuesday called for an infrastructure spending spree to promote growth. And the Communist Party’s Politburo on Friday promised “specific measures” to support the internet economy.

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

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

Shan Weijian, founder and chair of Hong Kong-based private equity firm PAG, recently criticized the government for policies that resulted in a “deep economic crisis,” according to the Financial Times, citing comments he made at a meeting with brokers. PAG did not respond to a request for comment.
Foreign investors are ditching China. Russia's war is the latest trigger

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

In a move to reduce people’s online anonymity, Weibo told users on Thursday it would start to publish IP locations on their account pages and when they post comments, in a bid to combat “bad behavior.”

Chinese tech giants have been clamping down on people making negative comments about the economy since last year. In October, Tencent suspended more than 1,400 WeChat accounts after the government launched a crackdown on internet posts that it deems are harmful to the economy.

Tencent said the accounts had made bearish calls about financial markets, “distorted” the interpretation of economic policies, or spread rumors. A public account run by Chen Guo, chief strategist for Shenzhen-based Essence Securities, was among them.

Likely trigger for the social media ban?

It’s not entirely clear which of Hong Hao’s posts triggered the most recent ban.

The last reports posted on his WeChat public account were titled: “Be wary of capital flight” and “What should Chinese ADRs worry about.” ADRs are securities issued by Chinese firms listed in the United States.

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Hong warned in those reports about foreign investors dumping Chinese stocks and called attention to the most severe capital outflow since the pandemic began. He also blamed China’s tech crackdown, rather than new US rules on listings by foreign companies, for being behind an epic sell-off in Chinese ADRs in March.

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

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

China’s stock market is the second worst performing in the world so far this year, behind Russia, according to Refinitiv Eikon.

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