Date
29 July 2017
Will Shum says the resumption of initial public offerings will affect market liquidity and cause fluctuations in share prices. Photo: HKEJ
Will Shum says the resumption of initial public offerings will affect market liquidity and cause fluctuations in share prices. Photo: HKEJ

Extreme volatility seen returning to China stock market

Chinese stocks may be headed for another roller-coaster ride amid growing speculative activity.

Surging margin financing and short-selling in Shanghai and Shenzhen are the latest signs of a new round of extreme volatility, the Hong Kong Economic Journal reports, citing online fund and bond platform fundsupermart.com.

Speculative activity in these markets has soared to 1 trillion yuan (US$157.27 billion), portfolio manager Will Shum said.

He warned that the resumption of initial public offerings will affect market liquidity and cause fluctuations in share prices.

However, Shum remains upbeat about the long-term performance of the Chinese stock market given a raft of investment opportunities from the recently announced 13th Five-Year Plan.

Meanwhile, high-yield bonds by Chinese property developers are expected to benefit from an impending interest rate hike in the United States, he said.

But he cautioned against US dollar-denominated short-term bonds and global bond funds given extremely low interest rates in G7 countries.

[Chinese version中文版]

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