Monday, 6 June 2016

Chinese equity valuations still don't buoy confidence

As the world's attention turns directly towards the trouble brewing under the surface of developed nation economies, the hype that once set panic through the entire global financial system over the stock market bubble that had been built into the Chinese equities a year ago seems to have faded with the focus shifting to more pressing risks such as the impacts of negative interest rates, Britain's exit from the Eurozone and the slowdown in economic activity in major world economies.  

However when weighing up the high valuations attached to global equities in comparison to the world's overall future economic perspective, the concern is warranted but more so when you consider that Chinese equity valuations are three times higher than their world peers!!!

Furthermore given the surge in volatility that's surfaced in the past year you'd think it would've had some profound effect on scaling back valuations to within reason but yet this hasn't been the case with the measure remaining largely unscathed after the brutality of market moves.  

Suggestions imply although market concerns over developed nations takes centre stage presently, the mitigation of fear won't be offset if their leaders are able to avert a crisis of sorts, instead it provides market participants with further impetus to add more pressure on future certainty.

The belief that China's woes will simply diminish is a fate many have fallen ill too in the past and the risk of the same happening is being stoked by the fact that attention drawn on the matter doesn't feature more predominantly as it should. Perhaps it could be market priorities set on finding comfort in the certainty of developed nations which has been apart of market norms for some time however the idleness of dealing with the issue makes me start hearing the sounds of a tick-tock clock.
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