Sign up today and take advantage of member-only content — the kind of timely, cutting edge industry insight that only Money Management Executive can deliver.
  • Exclusive Online Only Content
  • Free Daily Email News Alerts
  • Asset Management Blogs

Fund Forward

Is China's Equity Market Poised for a Violent Burst?

China's equity market has reached such a frenzy of irrational exuberance that Chinese authorities are not the only ones sounding warnings about the market becoming overheated.

China's benchmark Shanghai Index soared 130% in 2006 and, since the February correction, is up another 40%. The nation's economy rose 11.1% in the first quarter and 10.4% in the previous quarter, while China's trade surplus is double what it was a year ago.

With all of this excessive liquidity, billions are pouring into new mutual funds on the very first day of their debut. Every day, 200,000 Chinese join the investing ranks, with 91 million mutual fund accounts now open with $126 billion in assets.

Lacking traditional measures to cool the market, the China Securities Regulatory Commission has been dragging its feet on approving new mutual funds and forcing companies to set lower prices on their IPOs. But that's only contributed more to the casino-like madness.

China's securities regulator is now considering only allowing better-quality, "red-chip" companies to offer IPOs as a way to stabilize the market. Meanwhile, the People's Bank of China has raised the required reserve ratio for banks, now 11%, seven times in the past year and is now considering raising interest rates.

But a number of economists are not convinced these measures will suffice. Xia Bing, director of the finance department at the State Council of the People's Republic of China, recently warned investors to be cautious. BCA Research issued a note saying, "We have no doubt if China's market continues to spike up, the stage will be set for a very violent drop."

Morningstar Analyst Bill Rocco also recently cautioned investors in China-focused funds, noting that they have lagged emerging markets funds over the past three, five and 10 years. Rocco points out that China is a communist country, and with that comes political and governmental risk. In addition, China's economy, heavily dependent on exports, would be hurt by protectionist measures by its trading partners in the U.S. and Europe.

If none of these stats are convincing enough, take a look at one last fact: The average price-to-earnings ratio of the Shanghai and Shenzhen markets is now over 50. If that's not setting the stage for a market burst, I don't know what will.

(c) 2007 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

http://www.mmexecutive.com http://www.sourcemedia.com

Recent Posts

Mutual Funds Must Go High-Tech-v. 3.0

Over the last number of years, mutual fund transfer agencies and shareholder communications companies have tried to convince shareholders to accept paperless summary prospectuses, proxies, trade confirmations and electronically stamped signatures. Fund supermarkets and web home pages have broadened their horizons to include market commentary, videostreaming and personal financial news. At the same time, exchange-traded funds, funds-of-funds, hedge FoFs, unified managed accounts, target dates, 401(k) auto enrollment and heightened awareness among people throughout the country of the difficulties of being retired-have taken off.

Test of the Massey Mine

Fund giant boards of directors at AllianceBernstein, American Funds, Fidelity, Vanguard and others are reportedly starting to bring about meaningful change in the corporations in which they are invested. Proof should come any day now, when the shareholder proxy votes from the annual meetings are released. Fund chief executive officers spoke about the power and influence their proxies wield in an interesting Reuters article last week, "Mutual Funds Seek to Shed 'Rubber Stamp' Tag."

Milestones

In 2011, 401(k) plans will turn 30, but the milestones the mutual fund industry has reached in this time are but a nanosecond in the history of U.S. retirement policy. Executives we interviewed for this special edition of Money Management Executive for the Investment Company Institute's meeting in Washington, speak to important milestones of the recent past and into the future. Look inside for observations and forecasts by Ted Benna, Robert L. Reynolds, Dan Fuss, David C. John, Steven Miyao and others.

At Age 30, It's Time for a Revamping for the 401(k)

This year marks the 30th anniversary of the 401(k), the revolutionary retirement savings vehicle that has been annihilating pension plans, empowering individuals to take part in the stock market-and, sadly, that left retirees with the misfortune of leaving the workforce in 2000 or 2008 very badly off. The cracks in the system are prompting many asset managers, regulators and retirement experts to take a hard look at 401(k)s and how they can be fixed.

Index of Posts

70 Comments

Decorative painting and landscape painting, art paintings for sale have a high artistic level and ornamental value.abstract art paintings We can Glimpse from the style of beauty and local culture, experience the exoticcustoms.art deco paintings Composition layout of the whole painting light and dark has caused exude amood, ie,art paintings dense and thick, colorful, gleaming, makes the whole picture and intricate,beautiful, give a sense of the people relaxed and happy. http://www.artforsalecheap.com/

Posted by: jiade j | May 14, 2012 3:10 AM


The NBA announced the first annual awards. NBA Shop The SAN Antonio spurs coach gregg popovich won NBA2011-12 season of "the best coach". Tracy Mcgrady Shoes Gregg popovich led the spurs veterans staged the lockout-shortened season "miracles", Zoom Kobe 7 Shoes in the western conference amongst the elite is obtained in the top of the charts the regular season record. kobe zoom 6 At the same time, the spurs also created the continuous 15 season NBA playoff record of march.

Posted by: jiade j | May 14, 2012 3:09 AM


In particular, products from coach factory outlet with leather design are fashionable, handmade,leading the wave of American pop.It with simple,durable and unique style to win consumers.The coach factory online make no guarantees to their inventory so you may lose a really great deal or style simply because you did not act.To find a Coach Bag of any size, color or style to fit your needs at the coach factory outlet online is a very necessary thing for every beautiful woman.

Posted by: yan l | May 4, 2012 9:24 PM


mulberry uk create super shock many of the style with may completely different role.It has however getting confirmed how they insure the fact that merchandise you purchase will genuinely be reliable mentor product to mulberry uk outlet.

Posted by: online4426 o | April 23, 2012 1:33 AM


Tory Burch UK

Posted by: chun h | April 21, 2012 3:33 AM


very good post... and your blog is very informative. thanks a lot los angeles web design | web designer companies

Posted by: james b | April 17, 2012 7:48 AM


Adam Dunn Jersey Alex Rios Jersey Alexei Ramirez Jersey Andruw Jones Jersey Bill Melton Jersey Blank Jersey Bo Jackson Jersey Bobby Jenks Jersey Carlos Quentin Jersey Carlton Fisk Jersey Customized Jersey Early Wynn Jersey Gavin Floyd Jersey Gordon Beckham Jersey Harold Baines Jersey Jake Peavy Jersey Jim Thome Jersey Joe Crede Jersey Juan Pierre Jersey Ken Griffey Jersey Luis Aparicio Jersey Luke Appling Jersey Mark Buehrle Jersey Mark Teahen Jersey Michael Jordan Jersey Nellie Fox Jersey Nick Swisher Jersey Ozzie Guillen Jersey Paul Konerko Jersey Robin Ventura Jersey Sergio Santos Jersey

Posted by: aswdlblnd 1 | March 23, 2012 1:41 AM


You can find many Burberry Outlet Store Online now with the google website search ,so that you can buy some Cheap Burberry Bags directly from the website,you needn't go aboard now if burberry store are not exist in your local city.And the Burberry Bags On Sale with a incredible price ,you should be happy with them.

Posted by: damon g | March 19, 2012 10:33 PM


i think they all like the excessive info they are get out here

Posted by: clarke b | January 24, 2012 9:47 PM


This is a great posting I have read. I like your article. Thank you. busana muslim grosir ghaniyah

Posted by: teri a | January 7, 2012 12:03 PM


The brand names who specialise in just Moncler Mens Coats are growing in popularity and noteriety, and New Moncler Down Jackets are widely offered on the web and in selected large Moncler Women Jackets. 1 well recognized French brand name is 'Weekend a la Mer', and they offer you a smaller but stylish and sophisticated Moncler Mens Jackets. Being a French brand Discount Moncler Mens they certainly offer both warmer selections for the Winter via to Spring months, as well as http://www.monclermenstore.com/.

Posted by: feg g | January 4, 2012 7:59 PM


in other words, who Portland is air max 90 unclear, but) to the geographically closer teams, began this week, and I'll be a regular a few scrimmages or exhibition games.Here nike air max in Portland, Greg Oden, a hot debate about the future there will be time, and if you had a right to amnesty provisions are available.Started. The snow 140 inches average cheap north face jackets annual rainfall in this area for the stream is fed by the rain. Sometimes the north face of the earth's lazy flow of the river North Face Women's hoodie Red Black Country in 2011.

Posted by: fds d | January 4, 2012 12:26 AM


What if instead of the union of nike air max 95 the vote shows the level of the hand using a truly secret ballot vote, all members reject proposal to put? It seems possible that the proposal is passed, we'd be back today to the business.Of course, it's actually set up a CBA had taken some time, Stern, free agency to start calling the lock nike air max 2011 can be accepted. And it's in order to study the cheap north face aftermath of the volcano Mount St. Helens Volcanic National Monument created a major river system on both sides of the input stream to the high volcanic mountains are preserved.

Posted by: fds d | January 4, 2012 12:24 AM


Mulberry Bags are hot sale with free shipping in Mulberry Outlet Store. Welcome you come here,come our uggs outlet stores. ugg outlet stores is the best stores of ugg boots outlet,offer all kinds of cheap ugg sale. Ugg outlet store sales various of discount uggs products,including boots, sandals, slipper, welcome to ugg outlet store to buy high quality products. Buy Mulberry Bags enjoy top fashion and save up to 70% off now. Discount Mulberry bags sale,Mulberry Outlet.Buy Mulberry bags from our Mulberry factory shop outlet! 70%Off Mulberry Bags, Mulberry Sale, Mulberry Purses, Mulberry Alexa, Mulberry Bayswater,Top Quality Free Shipping

Posted by: zzz f | December 22, 2011 7:05 PM


Mulberry Bags are hot sale with free shipping in Mulberry Outlet Store. Welcome you come here,come our uggs outlet stores. ugg outlet stores is the best stores of ugg boots outlet,offer all kinds of cheap ugg sale. Ugg outlet store sales various of discount uggs products,including boots, sandals, slipper, welcome to ugg outlet store to buy high quality products. Buy Mulberry Bags enjoy top fashion and save up to 70% off now. Discount Mulberry bags sale,Mulberry Outlet.Buy Mulberry bags from our Mulberry factory shop outlet! 70%Off Mulberry Bags, Mulberry Sale, Mulberry Purses, Mulberry Alexa, Mulberry Bayswater,Top Quality Free Shipping

Posted by: zzz f | December 22, 2011 7:02 PM


One classic type of Moncler Women is the windbreakers. These type of men's coats are wearable for all types of seasons. Moncler Winter Jacketst is made of fabric that could stand through time and it belongs to the category of light men's Moncler Boots. During winter season, these type of Moncler Coats Women could protect you from the chilling wind outside and at the same time warmth your body. And Moncler Jackets Men could also be wear during winter since it is made of lightweight materials which is warm for you to bear Moncler Coats Women.

Posted by: patrick2009 l | December 18, 2011 8:56 PM


The best men's Cheap Moncler coats are fashionable, affordable and keep you warm. Make sure you shop around when looking for your Moncler Vest Sale and you will find one that fits the Moncler Jackets UK. I have owned several throughout the years and have been pleased with every Moncler Mens Jackets purchase decision I have made. With an ever increasing number of designers Moncler Womens Jackets entering the market it is easier and easier to find a great pea coat for Moncler Coats Online.

Posted by: patrick2009 l | December 18, 2011 8:54 PM


Low Price Uggs On Sale, quality guarantee fashion Uggs Sale, safe shippment uggs on sale. Welcome to buy to have a warm winter and be fashion in winter. UGGs Outlet, UGGs On Sale, popular as well as good quality UGG Sale Online. Cheap ugg boots sale here,we promise you can get ugg boots at the lowest price,be quick! UGGs will company you all the winter. To keep warm is also important for men and kids. UGGs add warm to your feet and your heart.

Posted by: zzz f | December 5, 2011 11:52 PM


With a chic and unique design, New Moncler Down Jackets are also a viable option for you gentlemen. You can pair them with Moncler Mens Coats, a coloured scarf and a pair of moccasins that are terrific for a movie night. Moncler Women Jackets have that fluffy feel which transforms them in a highly comfortable Moncler Mens Jackets item. One Moncler Online Store cannot ignore their miraculous property of preserving the heat and bestowing upon the body the type of Discount Moncler Mens that is so indispensable in the http://www.monclermenstore.com/.

Posted by: feg g | November 25, 2011 11:20 PM


With a chic and unique design, New Moncler Down Jackets are also a viable option for you gentlemen. You can pair them with Moncler Mens Coats, a coloured scarf and a pair of moccasins that are terrific for a movie night. Moncler Women Jackets have that fluffy feel which transforms them in a highly comfortable Moncler Mens Jackets item. One Moncler Online Store cannot ignore their miraculous property of preserving the heat and bestowing upon the body the type of Discount Moncler Mens that is so indispensable in the http://www.monclermenstore.com/.

Posted by: feg g | November 25, 2011 11:19 PM


We stumbled over here from a different website and thought I might as well check things out. I like what I see so now i'm following you. Look forward to going over your web page for a second time. Bowling Tips Tips For Bowling

Posted by: ashley b | October 18, 2011 10:58 AM


"I thought I would have made a great classic chanel handbag president," Pawlenty said. "I do believe we're going to have a very good candidate chanel bags online who is going to beat Barack Obama."He didn't immediately endorse a cheap chanel handbags candidate.Bachmann was quick to chanel quilted bag praise him, perhaps mindful of the need to broaden her appeal and reach his backers, who span the ideological spectrum.

Posted by: sdsd s | August 19, 2011 3:04 AM


His blue-collar upbringing offered him a natural rapport with herve leger dresses middle-class America. He governed as a fiscal hard-liner in a left-leaning state, winning his karen millen dresses second term in a year when Republicans elsewhere got drubbed. He made inroads with herve leger bandage dress the right crowds and assembled an all-star cast of advisers with loads of karen millen outlet presidential campaign experience.Pawlenty ran a traditional operation. In the lead-up to his campaign, he spread checks around to local politicians in key states through a political action committee while putting a heavy focus on small-scale events in places such as Iowa and chanel dress New Hampshire.

Posted by: sdsd s | August 19, 2011 2:57 AM


I like this post. A really good one. Thanks for sharing your wonderful information..... egr kit egr delete kit egr delete kits egr bypass 6.0 6.0 powerstroke egr delete egr delete kit 6.0 6.0 egr delete kit egr delete kits egr bypass kit ford leveling kit leveling kit ford leveling kit f250 f350 leveling kit

Posted by: larry n | May 19, 2011 2:32 AM


China's equity is really going very high. It can take over and can become no.1 in the share market... It was an interesting post to read... unique playing cards

Posted by: michael b | May 12, 2011 4:12 AM


Thanks for very interesting post. I have a high regard for the valuable information you offer in your articles. I really believe you will do much better in the future. cityville cheat codes

Posted by: Johnny Q | May 12, 2011 12:40 AM


Articol Mira Telecom.

Posted by: rca i | May 6, 2011 6:51 AM


Very interesting article. diseño web en venezuela

Posted by: diseno web e | April 21, 2011 9:49 AM


I dont know what to say. This blog is fantastic. Thats not really a really huge statement, but its all I could come up with after reading this. You know so much about this subject. So much so that you made me want to learn more about it. Your blog is my stepping stone, my friend. Thanks for the heads up on this subject. Small Business Loans

Posted by: Peggy B | April 6, 2011 5:30 AM

Lee Barney

Lee Barney served as editor of Money Management Executive from 2002 to 2010. Previously, at United Media’s Wall Street & Technology magazine and Risk/Waters Information Services, she covered financial IT. For TheStreet.com, she wrote the daily “Meet the Street” column covering a broad spectrum of market-moving events. Lee began her career as a reporter in Tokyo with The Japan Times and was executive editor of Spotlight magazine.