Editor's pick: This piece was originally published March 4.
TAIPEI, Taiwan (TheStreet) - Check the cynic's dictionary definition of volatility now and it says "Chinese stocks." That may someday need updating.
Forecasting stocks is as iffy as predicting earthquakes, so the usual who-really-knows caveats apply here. But people who follow the market expect that in about five years, Chinese share prices will start trading in a narrower range with a long-term upward trend almost like a Western stock exchange.
Shares fell 40% in mid-2015 on the benchmark Shanghai Composite Index after rising 150% over the previous year. They firmed from August through the end of the year but had sunk another 14% by March 3.
China's policymakers are aiming to bring market rules closer to international norms and lure more capital into stocks from fearful foreign investors or reticent Chinese individuals who now stash their wealth elsewhere. They see the stock market as a way to capitalize private enterprise and turn it into a new economic engine.
China will "modernize its financial market system in the next five years," state-run Xinhua News Agency pledged in November.
It's already starting to happen, and Chinese officials always achieve some semblance of whatever they set out to do, be that handling the SARS respiratory virus in 2003, cutting poverty to 10% in 2010 or keeping economic growth near 7% through last year.
"Market regulations will progress and transition into something similar to their global counterparts," said Nitin Dialdas, chief investment officer with Hong Kong-based fund manager Mandarin Capital. "The likelihood is that the markets will need to open up, which will require the regulations to be in line with those that global investors are familiar with."