TAIPEI, Taiwan (TheStreet) --China's notoriously volatile stock market is now becoming a place for the buy-and-hold investor.
Though Chinese stocks have skyrocketed over the past year, many analysts believe the rally is far from over. So if you can stomach the volatility, this market could offer some opportunities for the long-term foreign investor.
Stock values took off a year ago this month after new rules made it easier for Chinese nationals to buy shares. That encouragement came at the same time wealthy Chinese buyers were increasingly looking for places to invest, analysts say, primarily because Chinese officials were tightening the rules on investing in the property market, the traditional magnet for Chinese money.
"There's so much money in market now and nowhere to flow to but stocks," said Chester Liaw, economist at Forecast Pte in Singapore.
Shares in Shanghai rose 119% from May 2014 to April 30 this year, tracked by a 103% gain on the Shenzhen bourse. But the Shanghai Composite Index fell 4% on May 5 and posted a 7.7% drop Jan. 19, both tumbles following news that regulators would restrict bank loans for securities. The government said last month it would encourage short-selling instead.
Similar fluctuations could dog the market until regulators roll out a full suite of rules to bring it in line with international standards, making it more attractive to their own citizens as well as the 261 firms with qualified foreign institutional investor quotas. Institutions had previously worried about China's poor transparency, bad deals for minority shareholders, and spotty regulation.