Is now the time to buy back into China?

One tried and tested rule in investment is that the bigger and more widely shared the worry, the less likely it is to be realised. Remember Y2K and the Sars epidemic? Both produced warnings of global disaster. Neither turned out to be anything like the threat that doomsters had predicted. Contrast that with the subprime mortgage crisis, whose dimensions only became widely apparent some time after the crisis had already broken. In the years when investors should have been worrying about uncontrolled bank lending, most were too busy loading up on anything they could buy with cheap credit to notice the impending disaster that their own insouciance was helping to bring about.

On this measure, if nothing else, investors looking at China today should not have much to worry about. In the media, and on trading floors around the world, whether China’s economy is overheating and the Chinese stock market is moving into ‘bubble’ territory have been popular topics for months.