China plays on the rise

Mainland stocks are on an upswing. The CSI 300 index is up 12 per cent since its year-low in March while the H-share index has gained 20 per cent over the same period.

The Hang Seng Index has broken out of its 21,000-23,000 range - where it has traded most of the past five years - and was close to breaching the 25,000-point barrier last week, having closed at 24,532.43.

Veteran investors are used to such swings and are inclined to discount them. But there are reasons to think maybe this time it is different - a genuine rally may finally be under way following five years of flat to negative performance.

The main reason is the anticipation of the through train scheme that will let Hongkongers buy A shares on the Shanghai exchange and mainland investors buy Hong Kong-listed equities for the first time.

The plan will begin in October but has already resulted in funds pouring into H shares as investors expect them to trade in line with valuations of their counterparts in Shanghai.

There are also signs that the mainland's slowing economic growth may be ending. HSBC recently revised its growth projection for the mainland to 7.5 per cent from 7.4 per cent.