Despite being the second largest economy and having some of the most competitive and big multi- national companies around the globe, when it comes to the stock market, it is just lagging behind. The reason is obvious since Chinese are not fond of allowing foreign funds take over their companies. That is why they will first do things that they regard as necessary and only afterwards will they allow foreign investors enter their stock market.
A hint of chinese stock exchange’s future momentum is given through the ratio of stock capitalization/ GDP which is nearly 60%, while in America is 174% and in Japan 122%. This means that companies, which need leverage, strongly depend on bank or other lending, and those that will manage to grow will venture a stock market entry.
Nevertheless, China has since 2015 undergone a number of important reformations that aim to release the market, boost transparency and allow foreign investments. Many of these reformations have rolled to a halt because of the trade war, but it is certain that sooner or later, will be implemented and huge amounts of funds will enter the chinese market. For instance, chinese $16 trillions bond market has already become accessible to foreign investors.
In any case, chinese stock market index, which comprises of the sum of all categories, has currently reached a five year high and this cannot be neglected.