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Investors talk in the Stock Exchange Hall on February 3, 2017 in Hangzhou, China Zhejiang.
VCG | Ghetto images
The Chinese stock market saw a sharp rally this year as progress in artificial intelligence, steps aimed at acquiring the self -sufficiency of the chip and Beijing’s campaign to restore the optimism of investors to price prices.
But as the retail investors pushed the market higher and the bulls cheer up Liquidity Maintenance And political queues, some experts raise questions if the market enters the territory of the bubbles.
The continental CSI 300 index has risen about 16% since the beginning of the year and has been moving close to more than three years of maximum. The CSI 300 Information Technology Index, which measures the efficiency of technology companies within the CSI 300, reached its highest level since 2015.
“The continuing rally of equity in China seems to be excluded with the economic foundations,” Raymond Chen, a regional CIO for North Asia in Standard Chartered, adding that “retail investors have played a key role as they have transferred some of their bank deposits to the market.”
Retail investors dominate Chinese stock market stores, representing about 90% of daily trade, according to HSBC data. This is a sharp contrast to the main global exchanges in which institutions are running – on the New York Stock Exchange, for example, individual investors make up only 20% -25% of trade volumeS
The total savings of Chinese households are currently standing At more than 160 trillion yuan ($ 22 trillion)Record high, according to HSBC. However, Only 5% is distributed to shares, which means that there is a place to deepen the participation of retail, especially after the fall of deposits and property remains beyond the benefit, analysts told CNBC.
Foundations for inertia
“The basics do not support the inertia well, but the markets always lead the foundations,” says Hao Hong, a managing partner and CIO at Lotus Asset Management. “There are few signs of overheating in the common market, but the pockets on the market are a little too hot.”
“This is not a balloon yet, but it goes that way,” Hong said. He pointed out contractual research organizations – companies providing services for research and development of pharmaceutical, biotechnological, medical companies – and names of technology as the most risk segments, but stopped labeling them as balloons.
More than $ 3 trillion market capitalization in Chinese and Hong Kong shares have been added this year, according to Goldman Sachs. But China’s economic data suggest a little confirmation that a real and sustainable rebound is being held, market observers said.
The Japanese company Financial Holdings Nomura last month warned of excessive leverage and potential “balloons” as the stock exchange continues to increase even when China’s economy shows signs of spread in the second half of the year.
China’s economic delay deteriorated in August as a series of Key indicators failed to understand each otherS The sustainable weak domestic demand and Beijing’s efforts to reduce industrial over -capacity weigh production.
Industrial production increased by 5.2% last month, reducing from 5.7% of July and coming out its lowest pace since August 2024. Retail sales increased by 3.4% a year, under the estimates of 3.9% analysts in a Reuters survey and more slow than 3.7%.
“We have not seen signs of a reversal in the macro basics so far, although the current impulse can be supported by expectations for structural improvements in the economy,” said Chaoping ZHU, a world market strategist at JP Morgan Asset Management.
Semi-anniversary reports suggest some stabilization in sectors such as AI, semiconductors and renewable energy sources, and Beijing-influencing anti-influence to raise price wars-it can improve corporate profit capacity, Ju said.
For example, the Chinese chipmaker Cambicon reported record profits in the first half of the year, jumping over 4000% a year to $ 2.88 billion ($ 402.7 million) in the first six months, emphasizing the increasing inertia of local chip companies as Beijing insists on enhancing its home semiconductor.
However, Ju warns that technology estimates can have “prices in many optimistic expectations”, leaving the market vulnerable to return before the profit is catching up.
