Honeymoon May Be Over for China Stocks

China stocks have surged by nearly 40 percent in just over a month, shrugging off signs of a slowing economy, but valuations look stretched and a violent correction may be on the way, analysts said.

“We are entering into a very volatile consolidation period,” Hao Hong, chief strategist at Bank of Communications International, told CNBC. “The markets have risen for more than 300 days without a 10 percent correction, the longest time period in Chinese stock market history,” he added.

Shanghai’s stock market has been indefatigable this year. Even after the more eight percent sell-off since Tuesday, the Shanghai Composite is up 27.1 percent so far this year, compared with the MSCI Asia ex-Japan’s 10.8 percent rise and Emerging Market index’s 7.2 percent gain since the beginning of the year.

CNBC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.