Shanghai surge sees stocks hit 3-year high

The surge in mainland equity trading that coincided with market peaks in 2009 and 2010 is back again after the Shanghai Composite Index jumped to a three-year high.

The 30-day average value of shares changing hands on the Shanghai stock exchange exceeded 200 billion yuan (HK$252.51 billion) for the first time in four years on November 25, after rising threefold in the past six months, data showed.

Turnover last breached this level on November 9, 2010, the same day the Shanghai Composite began its slide into a 38 per cent bear market.

The previous surge came on August 7, 2009, two days after the start of a 23 per cent retreat.

"It's a good chance we're at a market top right now," said David Cui, the China strategist at Bank of America Corp who is ranked No1 by Institutional Investor magazine. "Based on the experience since the global financial crisis, surging volumes each time marked a temporary top for the market."

Jumps in trading may signal market peaks because they reflect too much investor "euphoria" toward stocks, according to Cui.