Why it's worth anticipating the next great bull market in China stocks
If a further substantial opening of the mainland's capital account happens, the inflows of cash would push share prices skywards
It might sound counter-intuitive, but international investors are getting increasingly excited about the performance prospects of China's onshore stock markets.
The interest is unexpected because of the lousy performance of mainland markets.
Although China's economy has grown rapidly over the past few years, Shanghai's A-share index remains more than 60 per cent below its 2007 peak.
And despite the best efforts of senior officials over recent months to talk up prices and boost sentiment by cutting off the supply of new share issues, the market has still fallen about 2 per cent so far this year.
Yet that is what has sparked international interest. After recent falls, the mainland share market is within a whisker of its cheapest ever valuations on both a price-to-earnings ratio and a price-to-book-value ratio (see charts).