Investors look for signs China rally will last
With Shanghai bourse's recent surge, some investors are positioning for a bull market but others are wary of speculative gains driven by liquidity
The mainland's stock markets are at their highest levels since December last year, with a dramatic rally that began a little over a week ago sparking hopes that one of the world's worst-performing equities markets has finally climbed out of the basement.
Some analysts suspect the rally is driven by speculators betting on policy easing in the money and housing markets, rather than confidence in consumer demand.
This year has already seen two, less steep, rallies fizzle out. Some analysts argue this one will prove more durable, even if it is partially fuelled by liquidity.
Low valuations for blue-chip stocks and potential fresh foreign fund inflows have combined with the positive data to set off a rally that they say could hold through the third quarter, and possibly set the stage for a bull market next year.
The Shanghai Composite Index gained nearly 7 per cent in just over a week and is up more than 3.3 per cent since the start of the year. Stocks in mainland companies in Hong Kong have gained about 3.6 per cent.