Loss of Facelift

Financializing its economy is a key component of China's "dual circulation" strategy. However, the playbook definitely calls for making haste slowly. More and more, the regulatory headwinds mussing shareholders' hair pieces seem to blow out of a decidedly non-Wall Street-ish concern for society at large.

Latest crackdown in point. You may know CMOs as the financial straws that broke 2008's back, and even CDOs & CLOs. China has, or make that "had", CFPOs: collateralized face peel obligations. That's right, acid bathing one's skin back to youthfulness is so popular, and costly, that millions take out loans to do so, which are bundled, securitized, and traded on China bourses.

With a stroke, loans for chemical peels, plastic surgery, and filler treatments have been cancelled, and holders of related stocks - Bloomage Biotech, Sisram Medical, Fosun Pharma, for example - are taking another kind of caustic bath.

"Maybe the abrupt regulatory response to threats of data security or exploiting tutors was hard to justify," says Edward Lehman, "but cosmetic surgery loans are deleterious from the bottom up. Keep in mind there are some 80,000 unlicensed clinics in China illegally offering cosmetic procedures. But the key driver - demand - is still there, so we're quite confident the market should reach its projected 300b+ RMB total by 2023."