Shanghai
CHINESE stock bulls may want to take note of the sell-off in financial shares.
If recent history is a guide, the losses in the CSI 300 Financials Index - which total 8.1 per cent since the start of the year compared with a 1.7 per cent gain in the CSI 300 Index - are signalling that the world-beating rally in Chinese equities could be about to come to an abrupt, and painful, end. The last time the industry lagged behind the broader market by this much in November 2007 and August 2009, the CSI 300 Index lost an average 42 per cent over the following 12 months.
Financial companies are often a leading indicator for China's US$5.5 trillion stock market because of their sensitivity to capital...
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