Originally published by the Voice of America (www.voanews.com).
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May 18, 2007

Rapid Rise of Chinese Stocks Sparks Alarm
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http://enews.voanews.com/t?ctl=1785F51:A6F02AD83191E1605ED3A8038DB9F7719574F7DCC14957C0 Shanghai's stock
market has risen about 50 percent since start of year - making it best
performing market in Asia Alarm is growing in Asia over the rapid rise
of China's stock market. As VOA's Heda Bayron reports from Hong Kong,
bankers and business executives are warning it may be a bubble waiting
to burst.







Chinese investor watches data shown on the board of a stock trading
house in Shanghai, (Feb 2007 file photo)

Shanghai's stock market has risen about 50 percent since the start of
the year - making it the best performing market in Asia. The Shanghai
market's main stock index has recently topped 4,000 points, a record.

But bankers and business leaders are increasingly worried that stock
prices are rising too fast.



Hong Kong's richest man, the influential chairman of property giant
Cheung Kong Holdings, Li Ka-shing has said there is a "bubble"
phenomenon in the Chinese stock market. He warned Hong Kong investors
to be cautious - because bubbles collapse.

The top economist for Standard Chartered Bank in Hong Kong, Tai Hui,
also has weighed in with a warning this week.

Tai says some correction or fall in Chinese stock prices is inevitable
given the record highs reached in recent weeks.

And on Friday, Peter Wong, executive director of HSBC, one of the
biggest foreign banks operating in China, called the concern about the
market "genuine". He warns that any significant drop in the Chinese
stock market would be felt heavily in Hong Kong. Mainland companies
make up half of the Hong Kong's stock market's value.

China's economy has been roaring ahead this year, despite efforts to
cool it down to avoid the risk of high inflation or a collapse of
asset prices.

The economy expanded more than 11 percent in the first three months of
the year. On Friday, China's central bank raised interest rates for
the fourth time in a year. The rate on a one-year loan went up 0.18
percentage point, to 3.06 percent. In addition, the central bank on
Friday raised the bank reserve ratio or the amount of money banks must
keep as capital - the eighth such move in the past year.

But the measures appear to have little effect. It has not stopped
hundreds of thousands of new investors from opening trading accounts.
The government fears many of those investors could face painful losses
if the market gains end, which could lead to unrest in some areas.

On Friday, the Shanghai Composite Index fell about half a percent to
4,030.