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A woman sorts medication in the pharmacy of Yueyang Hospital at Shanghai University of Traditional Chinese Medicine in Shanghai.

JOHANNES EISELE | AFP | Getty Images

China’s health sector is likely to be the next to be scrutinized, analysts warn, as the country’s regulators crack down on everything from technology to education to data security.

Chinese President Xi Jinping this week reiterated the need to support moderate prosperity for all – or the “common prosperity” idea that he has been promoting for months.

That’s what drives the spate of corporate crackdowns, analysts say.

“‘Shared prosperity’ remains an idea that is still looking for an implementation strategy,” said Rory Green, China economist at TS Lombard. “Right now it is much easier to regulate industry and capital markets than to initiate structural reforms.”

He predicted that next to the real estate market, Beijing’s health care system would be Beijing’s next destination.

The healthcare industry is one of the country’s so-called “three big mountains,” referring to rising costs in education, real estate, and healthcare – all of which are barriers to affordable living.

The health care system is “the only one that has not yet been affected by regulatory scrutiny” and “particularly at risk,” said Green in a statement on August 31.

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The Chinese government had previously promised to keep prices in check, but efforts will now be stepped up, Capital Economics said in a statement on Tuesday.

“Public housing and healthcare are likely to expand, while private medical providers and real estate developers may soon face greater restrictions on their ability to price and make profits,” wrote Julian Evans-Pritchard, chief China economist at Capital Economics.

Chinese regulators have already tightened restrictions on the country’s education sector, targeting billions of dollars in the after-school tutoring segment.

China stocks could fall another 15%

China’s crackdown last year affected a wide range of industries, from technology to education to food delivery.

That has led to heavy sell-offs in Chinese stocks, which have wiped billions of dollars from technology stocks over the past few months.

So far this year, China’s healthcare stocks have outperformed the broader Chinese indices.

MSCI’s Chinese health index has fallen slightly below the flat line since the start of the year, while the MSCI China index is down more than 13%..

But some healthcare stocks, especially companies that use technology platforms, are already suffering. JD Health, for example, is down nearly 50% this year. Alibaba Health has slumped more than 40% since the beginning of the year.

Green said TS Lombard predicts the MSCI China index could fall another 10-15% in the worst case scenario.

He cautioned investors to be cautious, saying that political risk would remain elevated until the Chinese Communist Party’s 20th National Congress next year.

“The political calendar is charged and with cadres eager to build populist credibility to advertise, political control of the markets is likely to remain elevated – rather than weakened – over the coming months,” Green wrote.

What could be safer to buy? The so-called government favorites, said Green. These include relatively safe sectors such as technical hardware, clean energy and defense.

The Director General of the World Health Organization (WHO), Tedros Adhanom Ghebreyesus, speaks during a bilateral meeting with the Swiss Minister of the Interior and Health, Alain Berset, on the sidelines of the opening of the 74th

Laurent Gillieron | Reuters

The World Health Organization is monitoring a new variant of coronavirus called “mu” that the agency says has mutations that have the potential to bypass the immunity provided by a previous Covid-19 infection or vaccination.

Mu – also known by scientists as B.1.621 – was added to the WHO’s list of “interesting” variants on August 30, the international health organization announced in its weekly epidemiological report on Covid published late Tuesday.

The variant contains genetic mutations that indicate natural immunity, current vaccines or monoclonal antibody treatments may not work as well as against the original ancestral virus, the WHO said. The mu strain needs further research to confirm whether it will prove more contagious, more deadly, or more resistant to current vaccines and treatments.

Mu “has a constellation of mutations that indicate possible properties of immune escape,” the WHO wrote in its report on Tuesday.

“Preliminary data presented to the Virus Evolution Working Group show a reduction in the neutralization capacity of convalescent and vaccine sera similar to the beta variant, but this needs to be confirmed by further studies,” she added.

The agency is monitoring four “worrying” variants, including Delta, which was first discovered in India and is currently the most widespread variant in the US; Alpha, first discovered in the UK; Beta, which was first detected in South Africa, and Gamma, which was first detected in Brazil. A variant of concern is generally defined as a mutated strain that is either more contagious, more lethal, or more resistant to current vaccines and treatments.

It also observes four other interesting variants – including lambda, which was first identified in Peru – that have caused outbreaks in several countries and that have genetic alterations that could make them more dangerous than other strains.

Delta was an interesting variant until the WHO reclassified it in early May after preliminary studies found it could spread more easily than other versions of the virus. This variant has since been blamed for a number of major outbreaks around the world, including in the United States.

The new variant, mu, was first identified in Colombia, but has now been confirmed in at least 39 countries, according to the WHO. Although the global prevalence of the variant among sequenced cases has declined and is currently below 0.1%, its prevalence in Colombia and Ecuador has risen steadily, the agency warned.

WHO said more studies are needed to understand the clinical features of the new variant.

“The epidemiology of the mu variant in South America, particularly the joint spread of the delta variant, is being monitored for changes,” the agency said.