An avalanche waiting to happen

Waiting for the bursting of the Chinese share bubble is like waiting for an avalanche. You can hear the rumbling but you have no idea when and where it will strike.

Among the most bemused of those waiting to find out are the Chinese authorities — torn between pride in the prowess of their markets and lack of experience in the way they operate. Last week the government made a tentative attempt to cool the markets by bumping up stamp duty on share deals and there was an immediate tumble in prices, followed by an upward blip and this week a more severe decline. Who knows where the market will be by the time you read this, but all the classic conditions of a stock market bubble are in place: the Shanghai exchange has seen prices rise by 130 per cent last year and another 50 per cent since January.