China’s official PMI rose to 50.1 in March vs. 49.9 in February, beating the consensus estimate of 49.7. Other PMI estimates from HSBC and Markit Economics also beat the consensus. China’s announcement of a new deposit insurance scheme for bank deposits beginning May also buoyed financial shares. The Hang Seng China Enterprises Index was up 1.1% at 11:00 a.m.

But is China frothy? New accounts are opening at an unprecedented rate and the press is full of reports of unbridled speculation in mainland shares. In fact, volatility from the vantage point of foreign investors is subdued in China’s market. FXI, the large-cap China ETF that hedge funds use as a proxy for the Chinese market, shows an historical volatility (3-month rolling standard deviation of returns annualized) of just 10%, vs. 7% for the S&P 500. The highest volatility among emerging markets is in Russia (off the charts) and Turkey. China’s risk, by this standard measure, is closer to that of the US.

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