The Chinese leadership confab that opened over the weekend could be a game-changer for investors willing to gamble on how policy changes might affect the country’s stock market. While Beijing has been mum on details of the widely-anticipated reforms, the investment community has mapped out its expectations.
Analysts say the so-called Third Plenum of the Communist Party’s Central Committee may set a clearer path for the economy and unveil plans that could change valuations for businesses ranging from financials to agriculture. Investors are looking for cues in a number of key areas:
Further opening up of the capital account and a more market-based foreign exchange policy. A freer yuan exchange rate, most likely in the form of a wider daily trading band for the tightly managed currency, is expected to lead to increased short-term volatility but further appreciation for the yuan in the long run, as long as Beijing maintains relatively fast economic growth.
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