The Shanghai Composite Index outpaced all major market performance over the last 12 months. Its 110 percent climb over that span has been a product of speculation, excessive leverage, and irrational exuberance defying economic fundamentals.
Incremental efforts by China’s securities regulator to cool off the stock market haven’t produced meaningful impact, leading some analysts to believe that more draconian intervention is in store.
Such action could rattle the markets and severely increase volatility going forward.
Most of the Shanghai Composite’s appreciation was achieved in the last six months, with a 91 percent gain. The rally is gaining momentum at a pace not seen since June 2005, when a similar advance preceded the late-2007 Shanghai stock market crash.
