Alan Miller, the chief investment officer of wealth management firm SCM Private, noted that one freshly listed firm in China had seen session gains for 34 days in a row and was now trading at a price that was vastly superior to its earnings potential.
"The valuations of the large Chinese stocks are not outrageous but some of the smaller ones are slightly insane," he told CNBC Monday, before warning that "markets always stop before you really kind of know it."
There have been "mini-wobbles" in Chinese indexes with the People's Bank of China trying to curb the usage of margin lending, according to Miller. However, who agreed that a sudden piece of legation from the PBoC could end the lending activity stone dead.
"That has to happen hasn't it? If people are allowed to open up, which they are currently, 20 margin accounts and they are buying on margin because stocks can only go up, that is a recipe for disaster," he said.
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Other market watchers point towards the forms of stimulus that the central bank is injecting into the economy as a reason why a sudden correction will be averted.
Fraser Howie, a managing director at Newedge, told CNBC Monday that he expects Beijing to unveil more stimulus to prop up its stumbling economy. He said it would translate into more upside for equities and added that we could still be talking about the potential for a market correction in a year's time.
"I don't know where the top is, I don't know where it peaks out, but there's no reason to think it can't go (higher)," he said.