Why China’s World-Beating Stock Rally Is Making Investors Anxious

When a quiet resurgence in Chinese equities developed into a world-beating rally, it took many seasoned market watchers by surprise.

There’s little sign of a revival in spending by consumers and businesses that would dramatically inflate the earnings of Chinese companies. Instead, the boom appears to be driven by hedge funds and retail investors seeking higher returns in an environment of low interest rates. There’s also optimism that breakthroughs in artificial intelligence and a government drive to address industrial overcapacity are about to kick-start China’s economy.