In most normal markets, when enough investors acknowledge the existence of a bubble, it will burst, so why has China’s ‘A’ share market, arguably the world’s most obvious stock market bubble, not popped yet?
The short answer is, of course, that China is not a normal market. Understanding what is going on in what has already become the region’s third-largest stock market, as well as what is likely to happen, requires a deeper understanding of the structural problems within China’s financial system.
Most headlines focus on the deluge of retail money that has poured into the ‘A’ share market since the authorities initiated their structural reforms. It is easy to be blinded by this spectacle: queues of frantic punters outside...
