One of China’s largest investment banks has warned its analysts against making any bearish calls and to avoid showing off their lavish lifestyle, as Beijing continues to clamp down on well-paid bankers.

Analysts at China International Capital Corp. are barred from sharing negative comments about the economy or markets in both public and private discussions, according to an internal memo sent to the research department this month and seen by Bloomberg News. Employees should also avoid wearing luxury brands or revealing their compensation to third parties, the memo said.

The directive underscores the increasing level of self-scrutiny at Chinese financial institutions after authorities lashed out this year at bankers’ “hedonistic” lifestyles, and ordered them to comply with President Xi Jinping’s “common prosperity” drive. It also highlights concern among international investors that China is increasingly restricting access to transparent data and research in the world’s second-largest economy.

While Xi has vowed to make the country a more attractive place for foreign capital, his government has also been curbing the availability of some economic statistics and cracking down on consultants that help global fund managers make investment decisions in China. Among recent examples of pushback against negative commentary, Goldman Sachs Group Inc. analysts attracted a wave of criticism in July after publishing a bearish report on Chinese banks.

CICC didn’t respond to a request for comment.

Extra Caution

CICC told its analysts to take extra caution when sharing views with clients outside China to reduce national security and political risks, according to the memo. They were also asked to conduct due diligence on experts they intend to invite to deal pitches and conferences, it added.

The Beijing-based firm is not alone in disciplining its employees as China stepped up its scrutiny over the conduct of analysts since mid-2020.

At least two other major investment banks have given verbal guidance to analysts over the past year barring them from making negative comments on the domestic economy or bragging about their pay, people familiar with the matter said, asking not to be identified discussing private information. A Shenzhen-based brokerage discouraged its economists from discussing topics including deflation and the yuan exchange rate, one of the people said.

The environment has made it difficult for financial conference organizers to line up speakers who are willing to share candid views about Chinese economy and markets at financial conferences, said the people.

Challenges Ahead

CICC’s latest document covers conduct guidelines that span from client engagement and social media use to expense reimbursement, with some parts extending to employees’ family members.

The company has already resorted to cost cuts amid slumping profits and a leadership reshuffle. Business-related expenses will be strictly controlled, with analysts discouraged from taking taxis home after roadshows or ordering drinks at business banquets, according to the document. CICC earlier this year slashed some senior bankers’ compensation for 2022 by more than 40% and scaled back travel perks.

Bankers may have to brace for more challenges ahead. China’s parliament said earlier this month the financial industry’s profits still have room to fall as a share of the economy, as regulators nudge banks to extend more support to the embattled property sector. On Wednesday, 19 Chinese brokerages including JPMorgan Chase & Co. and Morgan Stanley’s local ventures vowed to fight corruption in their investment-bank businesses.

Xi’s signature anti-graft campaign has brought down more than 100 senior financial executives and officials this year alone. And while China is striving to restore investor confidence in its feeble economy and markets, it’s likely to continue with its historic crack down on information deemed harmful.

According to the memo, CICC analysts should be discreet in commenting on social media, and avoid posting or sharing politically sensitive content. They’re also mandated to “actively” participate in party-building activities, which typically involve studying the musings of the top leaders.

Here are some other restrictions that CICC is imposing on its analysts:

• Avoid making comments that are inconsistent with government policies
• Avoid sharing unpublished views, full reports on social media WeChat, and try to keep all posts work-related
• Make sure family members abide by basic moral standards
• Avoid using full per diem allowance on meals when working overtime

--With assistance from John Cheng, Jackie Cai, Heng Xie and Denise Wee.

(Adds other banks’ restrictions from the seventh paragraph.)