In the last year, the Chinese stock market has risen by 24%. Despite this great increase in the Shanghai Composite Index, many of the stocks in the index actually declined in value. Every bull market is unique, but this latest Chinese bull market has many investors scratching their heads.
Over the last year the Shanghai Composite Index is up an impressive 24%. However, about half of stocks in the index have declined in value within the same time. Meanwhile, in the United States, approximately 85% of the stocks in the S&P 500 have risen in value in the last year. So what is wrong with the Chinese stock market?
To make it short, a handful of very large stocks are propping up their entire market. As a handful of large cap companies dramatically outperform their peers, the overall market is brought along. 724 of 1427 members of the Shanghai Composite Index have declined in value in the last year. Analysts warn that this lack of market inclusion is a very bearish signal for the Chinese stock market.
There are also reasons to be bullish on the Chinese market. There are analysts who argue that the Chinese economic expansion is just getting warmed up. And that over the next few year Chinese large caps will continue to shine while the rest of the market comes to life as well. The chinese market is undervalued compared to the American market. My feeling is that things are just getting warmed up in China. The global economic expansion is still in progress and undervalued Chinese securities will soon be in high demand.
Jeremy McDonald [http://ift.tt/2i0T4lB
Submitted December 09, 2017 at 12:01AM by ShiftSignals http://ift.tt/2Ap7Dv5
No comments:
Post a Comment