Looking historically at the Shanghai Composite Index since the time when the Global Financial Crisis struck in 2007-2009, the index was once very high at 5,272.00 points by the end of 2007. It came down sharply to 2,093.00 points on 2 March 2009. In the last 4 years (2014 – 2017), the index was above 3,000 points. However, it vacillated between 3,000 points to 3,500 points (after a brief spite in June 2015). See chart and graph below.
|31 Dec 2007||5,272.00|
|2 Mar 2009||2,093.00|
|31 Dec 2012||2,269.13|
|31 Dec 2013||2,115.98|
|31 Dec 2014||3,234.68|
|31 Dec 2015||3,546.13|
|30 Dec 2016||3,103.64|
|29 Dec 2017||3,307.17|
|30 Mar 2018||3,160.53|
|8 May 2018|| 3,161.50
Now the index was 3,160 points in recent months. If one were to believe that the world’s second largest economy is to continue to grow with the Belt & Road Initiative in the years to come, then it warrants investors to consider the possibilities of uplift in its stock market in the longer term. This is on the condition that the global economies do not face trade protectionist scenario and China is willing to free up her economy to market competitions. China’s shadow banking credit risk is also one area to watch carefully.
One caveat though is that China stock market can also defy rational thinking as the past is any indication. A single country investment can be risky. Maybe a calculated risk in investing in China economy is worth taking?
Copyright © 2018, limkimtong for Living Investment
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