2014-12-04

CASS Shanghai Composite Will Explode to 5000 in 2015

Wondering why Chinese stocks are going vertical? The Chinese Academy of Social Science (CASS) is forecasting the Shanghai Composite will trade between 4000 and 5000 next year. To put that in percentage terms, it would require an increase of between 40% and 80%.

Yin argues the main driver is government intervention. Since China wants to move away from debt financing and revive the equity markets as announced at the Third Plenum last year, a government directed bull market could spur equity financing and risk taking that bails out the economy.
Yin Zhongli no objection, "the economy continues downward," he says, but he believes the diversion of funds to the stock market next year will remain the case, not surprisingly, the central bank will cut interest rates and lower standards, in 2015 the risk-free rate of return will decline, there will be more money into the stock market.

Chinese doesn't have to do a lot to spur a major bull market. Once the herd moves, it is a fait accompli. The Chinese herd is a big herd.

I posted a more detailed discussion of Yin's arguments on Seeking Alpha: CASS Researcher Forecasts Major Bull Market For China In 2015

iFeng: 社科院金融所预测:2015年A股看至4000-5000点

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