China has been grappling with a slowing economy, falling property prices and increasingly tight financing conditions; however, the country’s stock markets have been surging. Moreover, ordinary Chinese have been piling into the market at a pace unseen since 2007. Investors in Shanghai and Shenzhen opened nearly 900,000 new stock trading accounts in the week that ended Dec. 12 alone-the most in 7 years.
After several lackluster years, Shanghai’s benchmark stock index now ranks as the best-performing major index in the world, surpassing 3,100 points — the highest level in nearly 5 years. In addition, Brokerage firms in China, the largest of which are state-controlled, have been riding high on the rally as well; however, Anne Stevenson-Yang, a co-founder of J Capital Research in Beijing said “There’s so much leverage in the market now that it’s really easy for it to become very volatile”.