Mobius says 20% retreat for China stocks 'very possible'

Hong Kong

MARK Mobius says that Chinese stocks have risen too fast after a world-beating rally sent the benchmark equity gauge to its highest level in seven years.

A 20 per cent retreat is "very possible", Mr Mobius, who oversees about US$40 billion as the executive chairman of Templeton Emerging Markets Group, has told reporters in Hong Kong. The Shanghai Composite Index rallied 90 per cent in the past 12 months, the most among 92 global benchmark measures tracked by Bloomberg.

While Mr Mobius says that the bull market in Chinese stocks is "intact", he's turning cautious in the short term after investors opened a record number of new stock accounts and increased margin debt to all-time highs. Mainland shares are unlikely to gain entry into MSCI Inc indexes this year, limiting demand from international …