China’s Stock Bubble Continuing to Inflate

April 15, 2015

With China’s stock market continuing to break records, not everyone is convinced by the current trend. CKGSB Associate Professor of Strategic Management Teng Bingsheng offers some sage advice for those interested in the tech sector.

The US and China are constantly compared and contrasted in almost any field you care to mention—their respective politics, economies, militaries and environment, to name just a few. Now, there is growing concern that the Chinese stock market could be inflating to a level not seen since the Nasdaq soared in the late 1990s—before famously plunging in the early 2000s.

A prominent article by Bloomberg claims that “the world-beating surge in Chinese technology stocks” is making that original surge in US-listed tech stocks “tame by comparison,” citing Chinese valuations in the sector that are on average a staggering 220 times reported profits.

The standout quote from the article was by CKGSB’s Teng Bingsheng:

“It’s a bubble in the making,” Teng Bingsheng, an associate dean at the Cheung Kong Graduate School of Business in Beijing, said in an interview on Tuesday. “Valuations are extremely expensive.”

As well as shaping the title of Bloomberg’s piece, U.S. Dot-Com Bubble Was Nothing Compared to Today’s China Prices, Prof Teng’s quote also drew additional media coverage, including China Daily’s Tech stocks near bubble territory, Business Insider’s Chinese Tech Stocks Are A ‘Bubble In The Making’ and several other articles.

While some feel that the market is soon due for a correction, many investors do not want to miss out on the current gains. Will history repeat itself? Only time will tell, but expect the debate to continue.

To read the original article on Bloomberg, please click here.

Understand China from the inside

Subscribe to our monthly newsletter today!

Understand China from the Inside

Subscribe to our monthly newsletter today!