LONDON - China's stock market is developing into a bubble and people run the
risk of making irrational investments, a top Chinese legislator told the
"There is a bubble going on. Investors should be
concerned about the risks," Cheng Siwei, vice-chairman of the standing committee
of the National People's Congress, told the newspaper in an interview published
on the FT's Web site late on Tuesday.
Cheng Siwei, vice-chairman of the
standing committee of the National People's Congress, speaks at a forum in
this file photo. China's main stock indices plummeted Wednesday as Cheng
warned of a stock market bubble and irrational investments.
"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."
Eight months into a rally that boosted the main Shanghai index 130 percent
last year, the market's elated mood and lofty valuations would lead to fears of
a crash elsewhere in the world.
But China's circumstances indicate a sharp drop is unlikely, and large
sections of the market should keep rising this year, though at a much slower
pace than in 2006, say most fund managers and analysts at local and foreign