Pursuits
Cheapest Stocks to Bonds in Five Months Lure Funds: China Credit
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The last time Chinese stocks were this cheap relative to bonds, the Shanghai Composite Index rallied 18 percent within two months. The prospect of history repeating itself is luring some fund managers back to equities.
The earnings yield for the Shanghai index was 3.46 percentage points higher than the average yield on top-rated 10-year corporate bonds on May 2, according to data compiled by Bloomberg. The valuation gap was last that high on Dec. 13. The ChinaBond Corporate Bond index fell in the week ended April 26 amid a probe into trading violations, ending a 25-week winning streak that was the longest since at least October 2008.