China¡¯s economy is buckling under the weight of tariffs and a deep-rooted property crisis, yet stocks are extending their bull run ¡ª a disconnect that¡¯s stirring doubts on the rally¡¯s staying power.
In just the past month, onshore stocks have added almost a trillion dollars to their market value, the Shanghai Composite Index has hit a decade-high and the CSI 300 Index has taken its advance from this year¡¯s low to more than 20%. That¡¯s when nearly every recent economic indicator ¡ª from consumption trends, home prices to inflation ¡ª has brought red flags for investors.
The rally has been driven by cash-rich investors shifting into stocks amid a lack of alternatives. While the market¡¯s steady advance may suggest less risk of a sudden correction, some analysts are warning that a bubble is in the making. Nomura Holdings is cautioning against ¡°irrational exuberance,¡± while TS Lombard is calling the mismatch a standoff between ¡°market bulls and macro bears.¡±
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