You know I am kidding, do you? We all know the bubble is there, but how much bubble do we got? Is bubble going to burst very soon? These are the questions the investors (more accurately speculators) in China should ask.
In my mind, there are fundamental reasons for this rising of Chinese equity values: over liquidity (too much money, too little stocks); improvement of company fundamentals including rapid growth; Gu Gai (the stock reform which remove cloud from the floating shares), etc.
Also keep in mind for us small investors the index is not as important as it sounds. Why? Because we are not buying index (or index fund) most of the time. We are buying individual stocks. While there are good correlations of some stocks and the general market, not all the stocks in China have same performance as the Shanghai Composite index, e.g., the Composite Index (000001.SS) went from 2700 to 4200 from Feb 27 to May 28, ICBC (601398.SS) did not move too much in the same time. The index tself is also screwed, too, with a heavy emphasis on banking stocks. So let others (fund managers) worry about the index.
Well, fun aside, I do think at some point Shanghai Composite Index will go to 8000, whether it’s the end of this year, next August (when the Beijing Olimpics starts), or year 2020 is another question.