And they’re at it again.  Yesterday saw Shanghai’s benchmark index soar into the 4,000 territory for the first time since the market began trading in 1990.  The Shanghai Composite Index, which tracks yuan-backed A shares and hard-currency-backed B stocks closed at 4,013.09 yesterday, driven by blue chips China Unicom and Bank of China. The index continues to surge today, reaching 4,031.64 by noon according to Bloomberg.

All this follows comments last weekend by Zhou Xiaochuan, governor of the central bank said that he was “concerned” about a stock market bubble in China as reported by the Shanghai Daily. The paper goes on to report that:

Analysts said fresh funds plus speculation that the Chinese yuan will appreciate further should help maintain the market’s bull run over the long term. They had mixed views on short-term prospects, however.

“Hundreds of thousands of new investors swarm into the market every day,” said Zhang Li, an analyst at Huatia Securities Co. “It addition to more funds, they bring volatility to the market, given their lack of investment sense.”

We’ve been down this road before it seems, and any sudden downturn would no doubt trigger international consternation, at least in the media. As Bloomberg reports, Goldman Sachs is already reporting that China’s stock may face a “correction” as earnings can’t justify the rally that’s made them the world’s biggest gainers this year. The CSI 300 Index, tracking yuan-denominated A shares listed on the country’s two exchanges, today rose as much as 0.5 percent and is set to close at a record.

This entry was posted on Thursday, May 10th, 2007 at 12:16 pm and is filed under Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.