Chinese Continue to Pour Money Into Stock Market

Investors in China continue to pour money into the stock market, disregarding warnings from securities regulators that the market may be overheated, the Associated Press reports. With the Shanghai Composite Index more than double what it was a year ago, investors opened 8.56 million new equity accounts in the first quarter of the year, compared with 5.38 million in all of 2006. Publicly traded companies’ earnings grew 44% in 2006 and the economy expanded 11% in the first quarter.

But a regulator said that investors “should be fully aware that there exists no stock on earth whose prices only surge and never slump.” And Credit Suisse economist Dong Tao issued a report warning that “in the case of a severe correction, this could lead to social instability.”