Investors’ growing demand for Chinese offshore stocks is pushing up the prices even of underperforming companies, according to Bloomberg, which says the trend may be a sign that the buying up of shares in Chinese companies is turning into a “frenzy.”
A third of the companies on the Hang Seng China Enterprises Index reached one-year highs last week, the first time this has happened since the 2015 stock bubble. Previously languishing stocks like PetroChina and China Galaxy Securities have skyrocketed in value.
The bull market in the China H-share gauge has now run for 714 days, one of the longest in its 23-year history. Although technical measures indicate that a correction is overdue, growing confidence in China’s economy will likely keep shares rising in the short term, according to Marcella Chow of JPMorgan Asset Management.
“It’s been a very rapid rally but only a change in fundamentals will trigger a correction and people are still quite confident,’ Chow told Bloomberg. “It’s all about finding bargains.”