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Thread: Will Chinese shares prices drop down?
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[quote=APAULT,235128]In one sense, yes they are sure to drop because there are always some dips. The question is will it be big enough to cause problems? Shares are overpriced on historical earnings but with the massive growth in profits there is some justificaton for high prices anticipating future profits. Of course if the companies cannot pay good dividends, investors may begin to query the high prices and sell. I would suggest that one reason that people are so keen to invest in the market is that interest payments in banks etc are so low. We are told there are massive private funds saved in low interest accounts at banks because people have chosen to save, (remembering the difficult past). But with such low interest rates, investing in shares looks very attractive. Now that money is moving into shares in the hope of better returns. The retail investor needs better returns without the level of risk that goes with shares.[/quote]
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