Chinesepod - Market mania

BIZCHINA / Weekly Roundup

Market mania

(China Daily)
Updated: 2006-12-11 08:34

Gathering in a huge meeting room in the downtown Beijing Focus Hall, more
than 300 men and women, young and old, are listening intently to a stock
investment forecast for 2007. It has been years since Zhang Yichi, a fund
manager with China Asset Management, has seen so many people crazy about
the stock market.

"I am puzzled because the market has climbed to such a high level, and
there's no sign of its stopping." A woman raises a concern with Zhang: "I
am afraid of buying in on such a high level. There will be no room for
margin."

"I bought some funds in April, and you know what, they doubled in value,"
Yu Na, a young woman, who works at an Internet company says. "I should
have put more money in," she says with regret. "I am afraid the steep
rise will not happen again."

[cartoon.chinadaily.com.cn]

For those who have heard about friends, colleagues or acquaintances
doubling their money recently by buying stocks or funds, the coming year
is suddenly getting great attention.

Zhang gives his answer to investors curious about stock market returns:
"The return for mutual equity fund investors is likely to be around 20 to
25 per cent in 2007," he says confidently.

Blue chip power

Starting at 998 points, the Shanghai Composite Index has risen more than
100 per cent since the beginning of this year. In the past month, the
index has breached the psychologically important level of 2,000.

Analysts like to call it a "burst after five years' slump." And for
investors, it is a switch from hell to heaven.

The Shanghai & Shenzhen 300 index, composed of 300 blue chips, has
climbed 41 per cent since the beginning of the year. The Shanghai 50
index, comprising 50 major blue chips in the yuan-denominated A-share
market, rose by 49 per cent. Both indexes surpassed the Shanghai
composite index, indicating that investment capital is flowing into blue
chips.

As China's stock market continues to climb, nobody can predict where the
rally will finally end. But for 2007, at least one thing is certain it
will be a year for blue chips.

By October, the Shanghai exchange had witnessed 47 initial public
offerings (IPOs) after the government lifted a year-long ban. The IPOs
for banking blue chips Industrial and Commercial Bank of China (ICBC) and
Bank of China were widely over-subscribed.

For 2007, the market is expecting major IPOs such as China Life, China's
biggest lifer insurer; PetroChina, the country's largest oil company; and
Bank of Communications. Already listed overseas, the companies now plan
to list in China .

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