How does the saying go… if you play with fire, you are liable to get burned? Investors who made the mistake of chasing returns in China’s A-share market this spring just got torched. Over the course of about 10 trading days, two of China’s major stock market indices plunged into bear market territory with the more widely followed Shanghai Composite index only a few ticks away from a bear market.
The question speculators now have to answer is whether or not the 20% pounding they just took in the A-share market is the start of a deeper bear market, or simply a correction on the way to higher highs. That’s not a decision I envy nor one anybody investing serious money should have to make today. Those playing the A-share market at these levels are just rolling the dice.
Jeremy Jones, CFA
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