World Markets

China market bubble? Bull vs. bear

China bubble trouble? Bull vs. bear
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China bubble trouble? Bull vs. bear

The Shanghai markets are in the midst of a speculative bubble, said Simon Male, Auerbach Grayson head of Asian equities, on Friday.

"I believe it's been too big in the Shanghai market," Male told CNBC's "Closing Bell." "What you've seen in many of these sectors outside the banks and energy are stocks trading at 50, even 60 times earnings."

The problem here is that Chinese investors have turned their attention to the stock market since the property market has been closed off as an avenue for investment, he said. And these high valuations have started to feed through to the Hong Kong market now that the Shanghai-Hong Kong Stock Connect is in place.

Read More Shanghai-Hong Kong stock connect sees record turnover

"The fundamentals are simply not there to back it up at the moment," Male said. "The Chinese will continue to stimulate an economy that is simply not growing the way the market believes."

An investor observes stock market at a stock exchange corporation on April 10, 2015 in Huaibei, Anhui province of China. The Shanghai composite index rised nearly 2% to 4,000 points at its close which reached the highest points in latest 7 years.
ChinaFotoPress | Getty Images

Brian Jacobsen, Wells Fargo Advantage Funds chief portfolio strategist, doesn't agree. He sees the Chinese economy as having strong fundamentals.

"There are areas you're probably going to get hurt if you try to stay there where it is purely speculative," he said.

"But overall I think there are some tremendous opportunities and upside potential even based on the fundamentals, provided you're looking at the right areas."

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