Burst or burnish?

30 May 2007 By Martin Hutchinson

While India celebrates its stock market hitting $1tr in capitalisation, China is trying to rein in its own frothy bourse. China s approach is unconventional, but it may end up being much better for the health of its citizens finances.

This content is for Subscribers only

Context News

Total market capitalisation of Indian stocks hit $1tr on 29th May, according to the Mumbai Stock Exchange. The Mumbai Sensex 30 index is up 6% in 2007, on top of 49% in 2006. It is up 500% since January 2003, trades on 20 times historic earnings and represents approximately 110% of GDP. The Reserve Bank of India has raised its repurchase rate from 6.25% to 7.75% since January 2006

China trebled its stamp duty on share purchases from 0.1% to 0.3% on 29th May; the following day Chinese stocks dropped 6.5%. Before the drop, the Shanghai market was up 60% in 2007, on top of a 130% rise in 2006. The market is up 300% since January 2003, trades on more than 40 times historic earnings, but represents only 25% of China's GDP. China is now believed to have 100m stock brokerage accounts. Since January 2006 the People's Bank of China has raised its benchmark lending rate from 5.58% to 6.57%.

Email a friend

Please complete the form below.

Required fields *