Fund managers wary of wild capital market fluctuations

The roller-coaster movement of China's stock indexes in the past weeks has raised eyebrows worldwide, including analysts and portfolio managers in Europe.

Market experts said margin financing - using borrowed money to trade shares, enabling traders to place greater sums in the equities market - and the accelerated pace of initial public offerings have contributed to the volatility of the A-share market.

"The original rise in the markets was way too fast for it to be sustainable, particularly since it was largely fueled by leverage. An additional factor was the government's IPO pipeline which was increasing supplies in the market and causing significant volatility. The markets were still rising by sucking equity out of the markets in the form of IPO deposits," said Robert Davis, a Brussels-based senior portfolio manager at NN Investment Partners.