China Stocks Defy Economy Angst as Bubble Risks Grow

China's economy is buckling under the weight of tariffs and a deep-rooted property crisis, yet stocks are extending their bull run—a disconnect that's stirring doubts on the rally's staying power.

- BLOOMBERG

In just the past month, onshore stocks have added almost a trillion dollars to their market value, the Shanghai Composite Index has hit a decade-high and the CSI 300 Index has taken its advance from this year's low to more than 20 per cent. That's when nearly every recent economic indicator—from consumption trends, home prices to inflation—has brought red flags for investors.

The rally has been driven by cash-rich investors shifting into stocks amid a lack of alternatives. While the market's steady advance may suggest less risk of a sudden correction, some analysts are warning that a bubble is in the making. Nomura Holdings Inc. is cautioning against "irrational exuberance," while TS Lombard is calling the mismatch a stand-off between "market bulls and macro bears."