Chinese Spurn Bank Savings in Favor of Booming Stock Market May 4, 2007 at 11:00 pm · Keen for a piece of China's red-hot stock market, people all over the country are withdrawing money from their bank accounts to invest in shares. Experts warn this could be a risky move. They say the market boom is a bubble waiting to burst, and that many retail investors could be hurt. Claudia Blume reports from VOA's Asia News Center in Hong Kong. A new survey by China's central bank shows that just over half of the respondents regard bank deposits as their most important financial asset, the lowest level on record. An all-time high of 30 percent - up from 19 percent a year earlier - believe it is better to invest in the stock market. All over the country, people are rushing to banks to withdraw their money and buy stocks. "Now that the stock market is booming, they are sort of catching the fever and think it's an easy way to make money," said Robert Broadfoot, who runs a political-risk consultancy in Hong Kong. Chinese retail investors are opening new share trading accounts at a rate of more than 200,000 a day. The Shanghai and Shenzhen stock markets are reaching new heights because of all the new money pouring in. The market mania started last year, when the Shanghai Composite Index surged 130 percent in value. The government has repeatedly warned investors of the risks of an overheating market. Liang Zhou, a research manager in Shanghai for Lipper, a company that studies investment fund performances, says many new investors - people such as students, office workers and retirees - are willing to take risks. He says many have a gambling mentality and they had no experience with China's last stock market collapse, six years ago. "New investors don't [didn't] suffer from the recession of the stock market, from the decrease of the stock market, so they are more emotion[al] even in such a red-hot market now," he said. Broadfoot says the small investors bear most of the risk if the market collapses. "The two major groups that we are really worrying of becoming over-exposed in a bubble market are, one, poor people that can't afford it and secondly, groups that maybe borrowed from the banks for purposes of investment," he said. Broadfoot says some people who take loans to invest in the stock market tell their banks they need the money for other purposes. He says if the market collapses, there could be an increase of non-performing loans.
Here's a mechanical system that probably makes big money, as soon as one of these 'contrarian' analysts say 'this is a bubble and it will end badly' you buy and hold with a 15% trailing stop. I'm pretty much this makes money but its a little late in the case of china. That might happen with metal futures soon though. The crowd might have a great ability to buy at tops but these 'analysts' have an uncanny ability of being early on bubble bursting
As we are aware the market game of musical chairs only ends when the public is in the game. It is common knowledge that Joe Public has yet to participate in this latest game of ramp the indices in the U.S and likely a contributing factor as to why no major correction has yet happened, Wallstreet likes to get all the marbles at once and have the government ,the Fed and the big banks capital to keep the game going to draw the interest of Joe and his like. Once Joe is in the correction will happen. Interesting though that China's people are now running to get in the game of musical chairs. I do not think the U.S is as independent a market as they once were and may not get to attract Joe into the fray if China gets Joe there in and crash first,the U.S will follow the crash and hopefully Joe and his like are absent from the game. That would be the biggest gaff Wallstreet will have encountered in their history,to catch themselves as the bagholders of the musical chairs stock distribution game lol. Go chinese go! get those paper weights!!!!