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Low valuations, market reforms and the prospect of monetary easing were all supposed to bring about a long-awaited turnaround for China’s languishing stock market this year, but halfway into 2011 and Chinese stocks have failed to live up to their promise.
Instead, the Shanghai Composite Index is on track to post a disappointing performance for the third year running, when compared to Hong Kong’s Hang Seng Index or the S&P 500 .
So far this year, the Shanghai Composite is up 1.5 percent compared to a gain of 4 percent for the Hang Seng Index and a 5 percent gain for the S&P 500 Index.
Stocks in Shanghai have been mired in a slump after declining 22 percent in 2011, when it was one of the worst performing markets in Asia, as a series of credit-tightening measures by the Chinese government hurt investor sentiment.
But analysts who’ve been predicting a major breakout for the market are still sticking to their views, pinning their hopes on a reversal of monetary tightening as well as financial-sector reforms to stimulate the economy.
Chris Tang of Marco Polo Pure Asset Management told CNBC her firm was sticking to its guns and forecasting a huge rally in the coming years.
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