The Chinese stock market has grown very quickly recently, and Chinese companies show phenomenal profitability. However the Chinese miracle could come to an end with a big collapse.
The Chinese actions in relation to bonds has become the most expensive for the last 6 years.
As per Bloomberg’s data, for the first time since June 2009 profitability of the Shanghai Composite index has fallen below profitability on bonds, with the highest corporate rating.
Within the previous year the stock value has grown by 100%, as it was almost 6 years ago.
Even now it’s worth noting that the Chinese financial dynamics is rather unstable. Analysts expect that ‘the market will launch a correction stage soon and it will be very unstable’.
As per Xinhua agency, the last week kickback doesn’t mean the end of the rally, but the market can pass into the mode of slow growth.
Thus rather often The National Bank of China switches between ‘bull’ comments when the market falls, and careful statements when volatility is high. These type of comment cause a lack of trust for The National Bank of China, when its main role as a regulator is regulation and control over market risks.