The Chinese stock market has been in a bull market since the beginning of the 1990s. The share price behavior as measured by the Shanghai Stock Exchange Composite Index has been characterized by cycles of strong rallies followed by sharp corrections then consolidations then another sharp rally. This behavior should not be a big surprise to investors. We all know that the Chinese economy has been a tremendous performer over the last 25 years or more and this has driven profit growth and higher share prices. Since 1990, real GDP grew at about 9% on average per year. This means the size of the economy was doubling about every 8 years.
