Talk of market top as Shanghai index hits three-year high

Shanghai

THE surge in Chinese equity trading that coincided with market peaks in 2009 and 2010 is back after the Shanghai Composite Index jumped to a three-year high.

The 30-day average value of shares changing hands on the Shanghai exchange exceeded 200 billion yuan (S$42.3 billion) for the first time in four years on Nov 25, after rising threefold in the past six months, according to data compiled by Bloomberg.

Turnover last breached this level on Nov 9, 2010, the same day the Shanghai Composite began its slide into a 38 per cent bear market. The previous surge came on Aug 7, 2009, two days after the start of a 23 per cent retreat.

"It's a good chance we're at a market top right now," David Cui, the China strategist at Bank of America Corp who's ranked No. 1 by Institutional Investor magazine, said. "Based on the experience since the global financial crisis, sur…