Are you kidding? The Shanghai Composite Index, perhaps one of the most inflated stock exchanges in the world, drops beneath 3,000 points (which it also did three months ago) and the bankers are screaming: buy!
Jerry Lou, Morgan Stanley’s China strategist, reckons that Mainland-listed shares are a "buying opportunity", brushing off concerns about China’s tightening monetary policy.
To be fair, Morgan Stanley has been bullish on China for a long time now, accurately predicting that the stimulus package would lift the country out of the financial crisis.
However, it is difficult to see how the market is a buy at 3,000 points, given the outlook. China is facing inflation and the possibility of a property crash and is still heavily reliant on government help, in the form of stimulus loans, to keep the economy going.
Mr Lou says that the introduction of margin trading, short-selling and index futures will "begin a new era" for China’s A-share market. While these tools may help encourage confidence in the market, they are unlikely to make Shanghai a any less risky in the long-term.
There is very little underpinning the market, and it seems pretty obvious to me that share prices have been ramped up by the loose money that has floating around the system in the past year, looking for a home. Once that money disappears, the market will fall.