Bubble Trouble In China

With China State Construction Engineering (CSCEC) raising over US$7bn on July 23 in the year's largest IPO to date, CFW this week highlighted the increasing risk of a speculative bubble in China, with a massive uptick in bank lending and an influx of foreign capital flowing into the stock and property markets. Sure enough, the Shanghai Composite Index (SCI) fell by 7.7% on July 23 after fears that government efforts to reign in bank lending could cut down on the liquidity that has driven the rally in equities.

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