In Caijing, editor Hu Shuli calls the current stock market condition in China “irrational exuberance,” a term used by former U.S. Fed Chief Alan Greenspan to describe the U.S. market in the mid-90s:
The risks continued to mount after China’s Labor Day holiday as the Shanghai Composite Index soared above 4,000 and more investors rushed into the market. With the number of individual investors approaching 100 million, the China Securities Regulatory Commission (CSRC) issued a serious notice that emphasized the “enhancing of investor education” to warn investors of risks and the “strengthening of market supervision” to crack down on illegal operations. Such serious language has seldom been heard in recent years. However, the market’s enthusiasm will not cool off soon, and the danger of getting trapped when the market trend reverses is still there. [Full text]
Also on this topic, “China’s stock surge raises red flag about global fallout should prices tumble” from AP.
