China H Shares Are Testing History With Wildest Swings Since '07

The flag of Hong Kong Exchanges & Clearing Ltd. (HKEx), top center, the Chinese national flag, bottom center, and the Hong Kong SAR flag, bottom right, fly in the Central district of Hong Kong, China, on Wednesday, March 2, 2016. HKEx, owner of the London Metal Exchange, posted a 68 percent increase in profit from commodities last year as expanding fees from trading countered the first decline in metals volume since 2009.Photographer: Justin Chin/Bloomberg

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By Sofia Horta e Costa

January 29, 2018 at 3:49 AM UTC

This article is for subscribers only.

What goes up, often comes crashing down.

That’s been the state of play for Chinese stocks trading in Hong Kong since the 1990s, and if history is any guide, this year’s 17 percent rally in the Hang Seng China Enterprises Index should ring a few alarm bells. Dramatic collapses have typically followed melt ups, and the leg lower is usually steeper.