Shanghai Composite index fell 7.40 percent, while Shenzhen index ended down 7.87 percent.
Chinese shares has more than doubled in value over the past year, partly because small investors have flooded the market with borrowed money.
Chinese equities have had equally high valuation that Internet shares had before the bubble burst just before the turn of the millennium, writes Dagens Næringsliv .
– The Chinese market has all the characteristics of a bubble. This is a dangerous time point for Chinese stocks. This is a bubble that burst right now, says Investment Director Stewart Richardson at RMG Wealth Management to business channel CNBC.
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