yep, chinese authorities working hard to get the rookie investors out of the market.lol pros will be there to scoop it up...well looks like correction is looming, but I would suspect it will be short lived, I think there is still ton of money on the side lines trying to get in cheap. Chinese economy is strong and its very different from the one in the 1990 where it was supported by small number of investors mostly foreign. Chinese cash is going into the market this time hence they are pounding it as a bubble. Assets in China were supressed for a long time. 2 years ago people were losing their shirt over there.
Warning on China stock market ‘bubble’
By Sundeep Tucker in Dubai and Geoff Dyer in Shanghai
Published: January 30 2007 22:00 | Last updated: January 31 2007 04:28
The Chinese stock market is developing into a “bubble” and investors are in danger of behaving irrationally, a leading Chinese legislator said on Tuesday in the strongest public expression of concern to come from a senior state figure.
Cheng Siwei, vice-chairman of the National People’s Congress and an influential figure in Beijing financial circles, warned the mainland stock market could be overheating, after a rise of 130 per cent last year.
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“There is a bubble going on. Investors should be concerned about the risks,” Mr Cheng said in an interview with the Financial Times.
“But in a bull market, people will invest relatively irrationally. Every investor thinks they can win. But many will end up losing. But that is their risk and their choice.”
He added: “You can’t take administrative measures to change people’s behaviour. The market is based on people’s behaviour. Investors will have to learn their own lessons.”
After a five-year slump from 2001, the sharp rise in the market during the past year has prompted a stock market frenzy in mainland China by retail investors. Shanghai’s exchange has seen record daily trading volumes this month.
Mr Cheng, speaking at the FT China-Middle East summit in Dubai, is not officially involved in financial policy but his public views often reflect the thinking of senior leaders.
His comments came as signs emerged the government was trying to limit speculation in stocks. A sharp fall could hamper plans for large companies to launch domestic flotations this year.
The China Banking Regulatory Commission has begun to investigate whether individuals have been using loans for cars or houses to invest in stocks, a government official said on Tuesday
The banking regulator is also looking into use of credit cards to fund share purchases.
The government body that oversees state-owned companies has warned them not to speculate on the stock market. The State-owned Assets Supervision and Administration Commission said a collapse in the stock market would hurt both companies and the public. Some state-owned companies have formerly borrowed money to buy shares.
Some China-based analysts believe the fears of a stock market bubble are exaggerated.
When investing always start with an assumption that the stock market is dead wrong.
