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China stocks are overheating
22 January 2007The Chinese stock exchange has appeared the most expensive in Asian region. Citigroup, HSBC and UBS experts are worried with this state and ask investors to avoid it for some period of time.
Shares traded on Chinese stock are almost twice higher comparing to summer 2006. Among the specialists this tendency sets more worries than optimistic hopes for gains.
Shares of the greatest Chinese insurer- China Life insurance- have doubled, as trade has begun in Shanghai on January, 9th. Its appearance in the market provoked the sale of stock, in which investors ordered in 49 times more share, as they could really buy.
The Industrial and Commercial Bank of China, which is the central bank of China, has received 70 percent due to sale its shares in October 2006 in conditions of the unprecedented public offer. The demand for shares from people in China was five times more than that from the institutional investors.
The chief executive of DBS Asset Management, Lau Wing Tat said that The Chinese stock market is sending first ″alarm signals″ of its overheat.
Nevertheless, last Saturday meeting of top economic planners insisted on continuing to liberalize stock exchange markets and did not state any anxiety about the overheating in the Chinese stock exchange market and the overheating of China’s economy.
Nobody denies that Chinese stocks offer much higher profits than any other country’s China’s investment funds and options, but nobody objects off that the situation is changing for worse, becoming threatening and risky.
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