Journal quotidien finance & innovation
Financial Year Financial Year

Journal quotidien Finyear : finance & innovation all the year

 
 
              



China Market Strategy - UBS Investment Research - Part. 1


The purpose of the three reports in this series is to examine the current rally in A-shares, and its effect on H-shares. In this first report, we argue that a bubble is in the making and that A-shares are heading towards higher levels of overpricing.



Where China shares are going ? #1--A shares liquidity
  • Signs of bubble surfacing
There are many signs that A-shares are going into a bubble. However, history suggests that A-shares can stay overpriced for a sustainable period of time.

  • Liquidity to the stock market
We believe looking only at the monetary aggregates is insufficient. The 2005 stock market reform is a significant event. It changed perception on stock investment radically and brought investors' confidence back. We think a better indicator of liquidity going into equity market is the ratio of stock market turnover to money supply.

  • More liquidity into stocks
We have decomposed the turnover-to-M2 ratio by including market cap and GDP. We then compare this ratio to past bubble peaks in Japan, Korea, Taiwan and HK. We find further upside in China's turnover-to-M2 ratio before hitting a peak.


Suite dans le document PDF ci-dessous

A_share_bubble__1_May_07.pdf A share bubble #1 May 07.pdf  (109.84 Ko)


Mardi 22 Mai 2007
Notez


Les derniers articles publiés sur Finyear

Recevez notre newsletter quotidienne comme plus de 40.000 professionnels de la gestion et de l'innovation financières



évènements


Lettres métiers


Livres Blancs




Blockchain Daily News


Actus Nasdaq