Capital Markets, China, Hong Kong - Tuesday, September 1, 2009 22:15 - 0 Comments

II China report: capital markets. Shanghai bounces back

Institutional investor, September 2009

China report – capital markets

China’s stock markets are back with a vengeance. The Shanghai Composite Index, the worst performing major market last year, has doubled since November, better than any comparable index worldwide. The initial public offering of China State Construction Engineering, which raised RMB50.2 billion in July, was the biggest in the world since March 2008. And new IPOs are in some cases trebling on debut. Which raises the question: boom or bubble?

The pace with which China’s markets have rebounded has been extraordinary, but in keeping with the behavior of one of the world’s most volatile markets. Despite the fact that China has weathered the global downturn surely better than any other major nation – many believe it is on track for 8% GDP growth in 2009 – its stock market dropped 65% in value in 2008 before this year’s rebound. By market capitalization China is now the second largest stock market in the world, overtaking Japan, but this scale has not given it stability, and the dominance of retail money has made it a particularly fiery place to be. That’s not going to change any time soon: in a single week in July, 566,937 new trading accounts were opened. Continue…

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