China Stock Rally Draws Skeptics as Citi Sees Irrational Buying
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China’s world-beating equity rally is drawing out skeptics who say the gains are amplified by borrowed money and don’t reflect the nation’s economic fundamentals.
Stock purchases that sent the Shanghai Composite Index to a three-year high today are “irrational,” said Ken Peng, a strategist at Citigroup Inc.’s private bank in Hong Kong. The advance is another bubble driven by leveraged traders, said Andy Xie, the former World Bank economist who was one of the 50 most influential people in global finance, according to last year’s ranking by Bloomberg Markets magazine.