Why Is China Witnessing A Raging Bull Market?

Loading...
Loading...

In the past one year, the Chinese stock markets are up by over 120 percent and there doesn't seem to be any signs that this raging bull market is going to slow. Eric Peters, Peters Capital Group CEO and CIO, was on Wall Street Week recently to discuss why the Chinese stock markets are booming.

Fundamental Thing

"It's a raging bull market, and so the question is why," Peters began. "And I think a lot of people pointed to easier rates, which is happened recently [sic.].

Related Link: China Vanke Q1 Profit Declines

"I think something more fundamental is happening there. I call this Yin-Yang. In the sense that for 25 years, Chinese stocks really did nothing. Up until last year, Chinese stocks since early '92 were up maybe 50 percent – and this is during one of the largest economic booms in the history of mankind – and so, where did all that money go, essentially, that should have gone to the stock market?"

The Money Went Where?

He continued, "And it went to two places. The government told companies that they needed to put more people to work, okay? It's number one.

"Number two, they turned a blind eye to theft and corruption, and I think what the new government, the new government came in and said, 'We need to change a number of things.'"

The Changes

"Number one, we need to change our economic model, which been a mercantilist model. We need to move to something that's more balanced.

"Number two, they said, 'We have less people to put to work, because the demographics have shifted.'

"The third thing they said is, 'If we don't clean up corruption, we are going to have a revolution,'" Peters concluded.

 
Image Credit: Public Domain
Loading...
Loading...
Posted In: MediaChinaEric PetersPeters Capital GroupWall Street Week
We simplify the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...