China shares have disturbing signals amid an increase not supported by the economy

Pointers started appearing in the local Chinese stock markets, after a surprising wave of sudden increase in most of them with the flow of liquidity more than it was based on an improvement in the economic foundations. The increase on Monday extended the value of trading in the second largest stock market in the world to 3.1 trillion yuan ($ 433 billion), which is the second highest level in its history. The “CSI 300” index continued its profits for the fourth consecutive session to be one of the best achievement in Asia this month. But the indicators of evaluation, technical analysis and margin financing have begun to make warnings. Here are indications that the market height seemed excessive: the market looks more expensive with recent profits. After the increase by more than 13% this year, the “CSI 300” index circulates about 15 times the expected profits, which are the highest since early 2022, and on the average average of about 12 years. You might be interested in: The Chinese stock market worth $ 11 trillion is having a tranquil recovery, the attractiveness of small stocks in China is the attraction of the “CSI 500” index of small shares that in turn, as it trades about 21 times the expected profits, much higher than the average ten years of 17 times. Although it is still lower than this year, profit estimates for each share issued by “Bloomberg” have risen over the past few weeks. The “Star 50” index, which includes many exposed shares in the slice sector, was the most important example of the last boom. Almost two -thirds of its components are traded above the upper limit of the Bollinger band, which is a general tool for volatility that measures whether the arrower is harder or lower than its value. This percentage is the highest since the 100% in October, and it can be a special exit signal with the same indicator that exceeds the upper limit of four consecutive sessions. See also: Chinese stocks lead global markets with chips. Technical indicators show additional warning signals; Four important indicators of local stocks have reached excessive purchasing levels. The relative power index has increased for 14 days of large stocks and growth stocks, in both Shanghai and Shinzin, to the level of 80, that is, much higher than the 70th threshold, which usually indicates a ‘excessive purchase’. The volatility index in the Chinese market at the lowest level can find investors the assurance that these levels often coincide with high fluctuations in the so -called ‘fear waves of the event’. But this time, the fluctuation index remained near its lowest historical levels for ten days of the ‘Shanghai Al -Muqtah’ index, which indicates that the morale of individual investors, who follow this indicator carefully, has not yet reached an excessive enthusiasm. Although some analysts are still optimistic about the ability of momentum to continue, the rapid expansion of margining purchases is an extra concern. Over the past few days, the value of these purchases has exceeded 11% of the total daily trading of the market and approached the peak registered in October. The size of the existing existing transactions funded by the margin increased to 2.1 trillion yuan, or about 6% less than the peak preceded by the market bubble in 2015, paid by the financial leverage. However, it should be noted that the size of the local stock market in China has expanded about 75% since the peak of a decade.