Doomsday Hedging Pushes China Markets To Extremes

China’s economy certainly has its problems. It is exposed to any global downturn. Accounting scandals at U.S.-listed Chinese firms have tainted investor perception and a mountain of local government debt has raised worries about Chinese banks. But investors may have gone too far where China is concerned. Chinese markets have been pushed to absurd levels that are hard to justify unless a major economic and financial crisis occurs in the country, some investors say. And there is little evidence to suggest such a crisis is going to happen.

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