Bloomberg.com, 5 May 2009, Chua Kong Ho
May 5 (Bloomberg) -- China is at risk of a stock market “bubble” that may burst as investor confidence in the nation’s economic recovery weakens and bank lending slows, according to China Galaxy Securities Co., the nation’s largest brokerage.
The Shanghai Composite Index has surged 50 percent since last year’s low on Nov. 4 amid signs the government’s stimulus measures are reviving the world’s third-largest economy. The gains have driven valuations on the index to 27.2 times earnings, the highest in a year and Asia’s third most expensive. These levels are “signs of a bubble,” Galaxy Securities strategists led by Teng Tai wrote in a report.
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