Ongoing correction in China markets does not mark the end of bull run: Chris Wood, CLSA

NEW DELHI: Even as a brisk 30-per cent fall in the Chinese stock markets have made global investors sit up and look, Chris Wood of CLSA believes that the ongoing correction does not mean an end to the Chinese bull run.

"Our base case scenario is that correction in China does not mark the end of China bull run," Wood said.

Chinese stocks have been falling ever since the benchmark Shanghai Composite index touched its recent high on June 12. The Chinese market regulator has taken a slew of steps but has failed to halt decline in stocks.

Geoffrey Dennis of UBS Investment Bank believes that the situation in China is a matter of concern for emerging markets in the long term.

"I think we should remember that the part of the market where you are seeing the tremendous volatility and the Asia market, the Shanghai Composite or the Shenzhen Index as well, are parts of the market where the domestic investors are still very dominant," he said.

So, the volatility in China is indicative of the volatility of investor sentiment inside China itself, he added.

Shanghai shares accelerated their declines of recent weeks on Friday, tumbling more than 7 per cent within the initial hour of opening.

The benchmark Shanghai Composite Index crashed 7.13 per cent, or 278.96 points, to 3,633.81. The Shenzhen Composite Index, which tracks stocks on China's second exchange, dived 6.96 per cent, or 154.26 points, to 2,061.55.