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China Braces For A Bubble
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| Contributor | ArmyDem |
| Last Edited | ArmyDem Feb 05, 2007 01:33am |
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| Category | News |
| Media | Weekly News Magazine - TIME Magazine |
| News Date | Thursday, February 1, 2007 07:00:00 AM UTC0:0 |
| Description | By KATHLEENS KINGSBURY/HONG KONG
Thursday, Feb. 01, 2007
Although he is 63 years old, Beijing retiree Du Shuzhan is not afraid to try something new. He has just discovered the stock market. A few weeks ago, he deposited $1,500 in his first share-trading account, and on a January afternoon he visited a local broker to buy shares of seven Chinese companies. "All my friends started to invest in the stock market last year," Du says. "My wife and I decided to join the trend." He admits that when it comes to deciding which stocks to buy, he lacks expertise. "I don't know much about it. I just picked the ones with low prices." But he figures he will do fine. "With all the money in the market, I don't see how it could go down."
Neither could Dutch tulip-bulb speculators in the mid-1600s nor American day traders in the dotcom boom of the late 1990s nor even Chinese investors in the early 2000s. The history of investing demonstrates that there is no faith stronger than that of newbies plunging into a molten market. And that certainly describes China today. Emboldened by last year's 130% rise in the Shanghai Composite Index--which made Shanghai one of the best-performing exchanges in the world--first-time punters like Du have been storming into Chinese stocks, ending the market's five-year slump and in recent weeks pushing daily trading volume to new records. They are ignoring the stop signs raised by market experts and government officials, who warn that a correction might be coming. |
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