Investment Clock insights

China in bubble territory?

Trevor Greetham

20 April 2015

China’s stock market is super hot despite a weakening economy and property market. I would put this down to the fact the People’s Bank of China is easing monetary policy and with the capital account closed, there aren’t many places for the money to go.

The Shanghai stock exchange composite index has doubled over the past year as the chart below indicates.

I visited Beijing and Shanghai in 2007, the last time we were in the bubble conditions on this chart. When I told a student I was a fund manager they asked how many times I’d doubled the money over the last year. Three times was pretty good, apparently. Twice was in line with benchmark.

The value of your investment and the income from it is not guaranteed and can fall as well as rise. This article is for professional customers only. The views expressed are the author’s own and do not constitute investment advice.

Shanghai Stock Exchange