Beijing turns investment bulls loose in China’s markets

In spite of a stumble last week the state-backed stock market frenzy will go on

Bull run: China’s stock market is soaring — up 100% in a year (Corbis)

IT HAS been a giddy ride for investors in China’s stock markets — up more than
100% in a year — and the Communist party’s official news agency, Xinhua,
does not want it to end.

The voice of the Chinese government spoke out to say that last week’s stumble
in stock prices “is not the end of the bull market” but just the prelude to
a slower but steady rise in values.

A day later, Morgan Stanley downgraded Chinese stocks for the first time in
seven years, telling investors they had become expensive. The Wall Street
bank lowered its rating from overweight to equal weight, according to a
report by Jonathan Garner, its head of strategy for Asia, who called the
China markets “technically overbought”.

The latest rally has coincided with a slowing economy that may struggle to hit
its target of 7% growth this year, with exports and imports both declining.