Where should you put your money in Xi’s new China?

As the “common prosperity” agenda rejigs society’s economic levers, the news may not be all bad for investors. In fact, per analysts interviewed by Bloomberg, state initiatives are providing a blueprint for where to invest in Xi Jinping’s new era.

• Luxury brands are out, staple foods are in: Instead of Prada and Gucci, investors should look at companies that will benefit from a spike in purchasing power in rural families, including makers of food and beverages, higher-end dairy products, household appliances, and affordable cars.
• Zuckerberg is out, Musk is in: High-level manufacturing such as semiconductors, EVs, robotics, and big data will benefit from state investments. Investors should stay away from contributors to the “distraction age”: games, social media, and the metaverse.

The context: “Common prosperity” took on national significance during a speech by Xi in August. Since then, it has expanded well beyond addressing wealth inequality to encompass new kinds of educational and development initiatives.

• Generic drugs are out, high-tech pharma is in: As the government pushes for more affordable medical treatment and drugs, investors should look out for innovative biotech and pharma firms.
• Wind and solar power initiatives are already very hot, but pay attention to companies with sustainable business models that aren’t just paying lip service to “going green.”

Also relevant: Aside from avoiding big tech companies and monopolies, investors should be wary of anything that may disrupt “social harmony.” A good touchstone is anything that can go viral — especially among children — and that doesn’t fit into the new social conservative zeitgeist, such as video games and celebrity culture.