Amid the heady euphoria arising from the steep rise in global equity prices, it is time to ask where the next splash of cold water will come from. We suggest that China is a possibility.
Media reports said on Wednesday that daily trading volumes in China’s two main markets touched $49 billion, which is more than the comparable figure for all the other major Asian markets combined. In India, for instance, the two main stock exchanges report a daily trading volume of around $2.5 billion.
As recently as six months ago, the daily share trading volumes in China were around $5 billion. Households have been pouring money into shares in recent months, no doubt wanting to benefit from the country’s red-hot economy.
But matters are moving too fast for comfort. In a new report, investment bank Goldman Sachs has warned that equity prices in China could soon move into what it calls “treacherous territory”