Can the world’s investors trust China’s wild stock markets?
- Foreign money is piling into China’s evolving markets – and could hit US$100 billion this year
- But a visiting US investor might be prompted to say, ‘Toto, I’ve a feeling we’re not in Kansas any more’
Frank Chen is back to an old addiction: constantly checking his stock trading account on his smartphone and browsing websites for potentially market-moving news.
No wonder. The 40-year-old accountant has seen his stocks shoot up by about 50 per cent in a month.
Yes, one month.
Those eye-popping gains coincided with a fast run-up in all of China’s indexes, including the Shanghai Composite Index, which recently galloped into a bull market in just 32 trading days.
“I pay more attention to the stock market and business news now as the market sentiment has changed dramatically,” said Chen, who works for a state-owned logistics supply-chain company in Shanghai and has invested more than 100,000 yuan (US$14,900) in the stock market. “I am now keeping a close eye on the stocks I own and the sectors that are leading the market.”
Retail traders like Chen – and other quirkiness in China’s markets – have suddenly become a lot more important for investors from New York to London to understand.