That's amazing but the Chinese markets are more so. Here's the Shanghai Composite Index over the last year:
From FT Alphaville:
China and a short nuttiness debate
We assume we’ve made our position on this pretty clear… but apparently Citi remain unconvinced.
To wit: “If the Chinese market were to double from here it would indeed be in bubble. The same is true for Asia, a doubling would put us back at 3x book which over the last 40 years has been the peak – four times. When we get close to those levels we will be in a bubble, till then it’s a bull market.”
From their GEMs team, which has been preaching China equities for quite a while (with our emphasis):
From an Asian portfolio perspective we’ve been over weight China since the middle of last year. We can’t say that owning China has been a pleasure on a daily basis but as of late, it has been a rather more pleasurable experience. During the time that we’ve owned China there have been times where investors have questioned our sanity rather vocally whilst others have been polite enough to sit through our rational. With the China market is doing rather well as of late, investors have been more on the listening side but still not quite on the “buying side”. The buyers you see have tended to be retail rather than institutional which, if you are bearish is then yet another reason as to why staying bearish is viewed as the right course of action. We continue to disagree and remain overweight China within both an Asian and EM portfolio and here is why…
Our approach is rather simple. Within either the Asian or EM benchmark we seek to buy markets which are cheap (defined as low P/E, P/CE, P/BV, P/S and DY) vs others and have better momentum (defined as EPS revisions and price momentum) vs the other markets in the universe… So where does China sit? China sits in the attractive quadrant.
The momentum is good, we all know this, and the market isn’t exactly expensive. So, when investors tell us that China is a bubble and expensive all we need to do is highlight that a market which is very certainly an investor favourite, India. This market is even more expensive relative to all the other markets and it isn’t as if investor after investor we meet tells us, “oh boy that Indian market is hotter than your average Vindaloo.”...MUCH MORE, including this tidbit:
Yesterday:...But before you go too mad buying up China ETFs, maybe have a quick browse back through a few things and consider whether Citi’s choice of benchmarks are going to matter over the shorter term.
For one, there’s the speed of the rally, as the FT wrote last week, “A rally that began in July last year pushed the Shanghai index above 4,000 on Friday for the first time since early 2008. The market has now gained 68 per cent over the past six months.”...
Please, For The Love Of God and All You Hold Dear, Give BlackRock Some Liquidity! (CNYA)
