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Is a bubble in China stocks being inflated?

The liquidity-driven A- and H-share rally may have some room to run but one cannot buy H-shares simply because there is a discount, says the Schroders Asian equities team

The consumer discretionary sector in China offers more value today. The risk-to-reward is attractive in this sector given the scope for an improvement in consumption later this year, especially if the wealth effect from the equity market is sustained.

THE sharp rally in Chinese share prices is not justified by the underlying fundamentals but it has considerable momentum and could continue for a while yet. A surge in China's A-shares and, more recently, Hong Kong's H-shares, has re-ignited a sense of excitement about the China equity story...

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