Have the China bulls started to lose the faith? Temasek’s third sale in a week of holdings in Chinese companies has fanned speculation that the Singaporeans are calling the top of mainland China’s bubbleicious equity markets, or betting that certain sections of the Chinese economy are past their cyclical peak.
But through to October, notes Xinhua Finance and The Milken Institute, it was business as usual in the realm of the Chinese markets. Stock markets finished the month up, though the pace of gains by China’s meteoric standards was rather sluggish, the Xinhua/Milken IPO indicator reached a new high.
The measure charts the performance of newly issued Chinese stocks, and has now been on the up for a total of nine consecutive months.
In October though, the indicator posted its largest percentage increase since January.
A last hurrah? November looks set to be a different picture.
Sinotruk this week saw its shares fall by more than 15 per cent on their market in Hong Kong – the worst performance for a listing this year – with bankers arguing that the IPO market in the region has passed its peak. Lex thinks that the tide has turned on overseas Chinese IPOs – and there are signs too of China’s domestic market cooling.
The Shanghai Composite on Friday closed at 4,871.78; down 17.6 per cent on the month, the largest monthly loss since July 1994, says Reuters. The index is now off just over 20 per cent from its high of 6,092.055 in mid-October – putting it officially in in ‘bear market’ territory.
At that October peak, the composite was up 128 per cent this year, and 525 per cent since the beginning of 2006.
Stand by for the bump. Chinese shares are set to return to earth.