BEIJING: China’s benchmark stock index fell more than 10 percent from this year’s peak amid growing concern that the country’s longest-ever bull market has propelled valuations to unsustainable levels.
The Shanghai Composite Index dropped 4.1 percent to 4,588.51 at 1:43 p.m. local time, poised to enter a correction for the first time since January 2014 and heading for its lowest close in four weeks.
Analysts are increasingly warning the stock market is in a bubble that will burst after the gauge more than doubled in the past 12 months. The bull market, which turned 928 days old Friday, is the longest since Chinese bourses opened for trading in 1990 and more than five times the average lifespan of the nation’s previous bull markets.
“I would not be too surprised if the correction goes deeper than anticipated,” said Hao Hong, head of China research at Bocom International Holdings Co. in Hong Kong.
The Shanghai Composite has fallen 11.4 percent this week, heading for its biggest decline since October 2008. Initial public offerings are also draining cash from existing equities, with new share sales this week expected to lure about 6.7 trillion yuan ($1.1 trillion) of bids, according to a Bloomberg survey of forecasters.
