China’s world-beating rally has alarm bells ringing as brokerages say to sell several hot stocks
- China stocks fall sharply after a breathtaking run
- Bearish calls come as more than 70 per cent of China stocks were technically above overbought levels this week
Alarms were sounded on the world’s best-performing equity market this year, as Chinese brokerages started to turn bearish on some of the hottest stocks by issuing rare sell ratings.
Huatai Securities cut to sell its recommendation on CSC Financial, the best performer on the CSI 300 Index this year with share prices more than tripling, in a report dated Friday, citing valuations that far outpace growth prospects and are much pricier than peers.
Just a day earlier, Citic Securities, the nation’s biggest listed brokerage, recommended selling shares of People’s Insurance Co Group of China, predicting the insurer will drop by as much 54 per cent in the following 12 months after more than doubling this year.
The bearish bets on the leading gainers on Chinese stocks sparked jitters among investors on whether this year’s rally has been too rushed. It took just 32 day for the benchmark Shanghai Composite Index to enter a bull market last month after a 20 per cent rise from a low. China has also been the world’s most overheated market in the world, with more than 70 per cent of the stocks technically above the overbought levels this week.
The latest calls contrast with a recent series of bullish ones, partly due to a rush of foreign money coming into China. Those boosters included Morgan Stanley and Goldman Sachs.
