Good grief, no sooner had we posted Bloomberg's version of Bank of America's concern (March 19) "BofA Warns of Chinese Stock Correction ‘Soon’ in 2015 Repeat", then we see this last night, again at Bloomberg:
Chinese stocks slumped on Friday, extending this week’s losses, with investors citing a lack of fresh catalysts after a blistering rally.
The Hang Seng China Enterprises Index slid as much as 2.7%, headed for its steepest two-day drop since Nov. 12. Technology shares bore the brunt of the selling after powering the market for most of the year. Xiaomi Corp. and Alibaba Group Holding Ltd. lost more than 2.5% each. Onshore, the CSI 300 Index dropped 1.5%.
Bearish calls have also started to crop up, with BofA Securities warning this week of a “meaningful correction soon.” Morgan Stanley sees volatility ahead, noting that onshore investor sentiment has cooled. The caution suggests the market has priced in the positives that emerged from the National People’s Congress earlier this month, when authorities pledged to support economic expansion and AI development.
While tech earnings have been largely positive so far, share reactions have been mixed as upbeat expectations were already priced in. This year’s rally has also taken valuations above historical averages. The Hang Seng China gauge is trading at 10 times its forward earnings estimates, compared to a five-year average of 8.5....
....MUCH MORE
