China's stock market may overtake the US as the world's largest by value in 3 years

After being credited as the fastest growing economy in recent times, China is set to add another feather in its cap in the next 3 years. And what is it this time you may ask? Well, leading emerging market fund manager Mark Mobius is of the opinion that China's stock market may overtake the US as the world's largest by value in 3 years as state-owned companies sell new shares and the country's 1.4 bn people put more of their money into equities.

Equity as an asset class is holding a lot of allure for the Chinese as they are increasingly looking to increase their exposure to the stockmarkets. Also, state-owned companies are showing a new keenness in coming up with IPOs and ushering in some more private participation. As reported on Bloomberg, at present, China's market is valued at US$ 3.2 trillion as compared to US$ 11.2 trillion in the US. As far as the performance of the indices is concerned, while the S&P 500 has gained 4.1% in 2009, China's Shanghai Composite Index soared 75% this year.

Having said that, what needs to be noted is that with the brouhaha surrounding investments in emerging markets, stocks have run up considerably in China. This means that while China's stock markets may surpass the US in the future, it will definitely not be a smooth road going forward.