China’s Stock Market Bubbles Surpass Value of Japan’s Stock Market
You can be darn sure that many Chinese people were happy to hear that the combined stock markets of mainland China (Shanghai & Shenzhen) and Hong Kong recently surpassed Japan recently in total capitalization. Whether or not things will stay that way is another question, but for now China is ahead.
It Takes a Bubble to Eclipse a Former Bubble
The irony is strong. Itself once a huge bubble, the Japanese stock market has finally yielded its second place position in the financial markets of the world to a combination of bubbling Chinese stock markets.
But history tends to rhyme, and it is likely that Japan’s stock markets will once again rise over China’s before someday being buried in the relentless long march of Chinese history.
This translated from this week’s Modern Weekly:
China’s Stock Markets Surpass Japan’s and Close the Gap with America’s
Over the past 18 months China’s financial markets have seen dramatic changes, creating new records as they escape any problems from the Subprime lending crises. If you include Hong Kong, the total capitalization of China’s stock markets has already surpassed that of Japan’s stock markets, becoming the second biggest combined capital market in the world, and setting yet another milestone for China’s stock markets.
As other markets have experienced sell offs from the liquidity crises, China’s market has continued to rapidly rise. On many trading days turnover in China’s stock markets has exceeded the turnover of all other combined Asian stock markets.
Are China Markets in a Bubble?
China’s stock markets’ rapid and large ascent has raised a big debate in the investing world over whether there is a bubble in China’s stock markets. Many Chinese analysts believe that the market’s rapid rise just reflects upon the strength of China’s overall economy. The rise in turnover reflects not just China’s present speculative trading atmosphere, but also all of the long term improvements in China’s capital markets. When you consider the stable rise of China’s economy, and the limited investment selections within mainland China, the present higher levels of China’s stock markets are reasonable.
But overseas analysts believe that China’s stock markets surpassing Japan’s is a sign of just how overvalued China’s markets are. Some believe that China’s stock markets have completely disconnected from reality, with the recent upstaging of Japan revealing just how large China’s current stock bubble is.
