It's been almost 12 months since China's equity market embarked on a precipitous decline that would erase US$5 trillion ($6.9 trillion) of value, and the nation's stocks have rarely been this subdued.
For the past two weeks, the Shanghai Composite Index hasn't strayed more than 51 points from the 2,800 level. Volatility on the gauge is the lowest since December 2014, while turnover has crumbled to levels more than 80% below last year's peak.
Margin debt, which fuelled 2015's bull market, has dropped by more than 1.4 trillion yuan ($294.5 billion) on China's equity exchanges as investor interest dwindled.
The muted trading masks convulsions in the nation's financial markets as an economic slowdown deepens and the authorities step up measures to prevent capital outflows. Rising corporate defaults are prompting concern over the size of China's debt burden, commodity prices are plunging as another speculative mania ends, while the yuan is heading for its steepest losses this year.
While state support for the stock market is limiting declines in the benchmark gauge, RS Investment Management says expensive valuations mean there's little incentive to chase gains.
"You still have an artificially high P/E multiple and that needs to come down as the A-share market adjusts to fundamentals," said Tony Chu, a Hong Kong-based money manager at RS Investment Management, which oversees about US$17 billion.
"Pain is likely going to continue."
Since May 9, the Shanghai Composite has closed between 2,850.86 and 2,806.91, with the average daily move being 0.4%. That compares with January, when swings of more than 3% were common, or the 5 per cent moves that were a regular feature of July's turmoil.
A gauge of 30-day volatility has fallen to 17, after peaking at 65 last year, and below the level of Japan's Topix index.
The drop in turnover has been even more dramatic. The value of shares traded on the Shanghai exchange fell to 118 billion yuan on Wednesday, the lowest level for a full day since October 2014, and down from a record 1.3 trillion yuan in June.
"It's rather unusual for A shares to be rangebound," said Daniel So, a strategist at CMB International Securities in Hong Kong.
"Usually it's like a pendulum."
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For the past two weeks, the Shanghai Composite Index hasn't strayed more than 51 points from the 2,800 level. Volatility on the gauge is the lowest since December 2014, while turnover has crumbled to levels more than 80% below last year's peak.
Margin debt, which fuelled 2015's bull market, has dropped by more than 1.4 trillion yuan ($294.5 billion) on China's equity exchanges as investor interest dwindled.
The muted trading masks convulsions in the nation's financial markets as an economic slowdown deepens and the authorities step up measures to prevent capital outflows. Rising corporate defaults are prompting concern over the size of China's debt burden, commodity prices are plunging as another speculative mania ends, while the yuan is heading for its steepest losses this year.
While state support for the stock market is limiting declines in the benchmark gauge, RS Investment Management says expensive valuations mean there's little incentive to chase gains.
"You still have an artificially high P/E multiple and that needs to come down as the A-share market adjusts to fundamentals," said Tony Chu, a Hong Kong-based money manager at RS Investment Management, which oversees about US$17 billion.
"Pain is likely going to continue."
Since May 9, the Shanghai Composite has closed between 2,850.86 and 2,806.91, with the average daily move being 0.4%. That compares with January, when swings of more than 3% were common, or the 5 per cent moves that were a regular feature of July's turmoil.
A gauge of 30-day volatility has fallen to 17, after peaking at 65 last year, and below the level of Japan's Topix index.
The drop in turnover has been even more dramatic. The value of shares traded on the Shanghai exchange fell to 118 billion yuan on Wednesday, the lowest level for a full day since October 2014, and down from a record 1.3 trillion yuan in June.
"It's rather unusual for A shares to be rangebound," said Daniel So, a strategist at CMB International Securities in Hong Kong.
"Usually it's like a pendulum."
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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