Sharp rise seen in new accounts amid sustained bull run
China's stock market regulator on Tuesday warned investors that there are still risks in the market, despite the recent sustained bull run.
The China Securities Regulatory Commission (CSRC) published a statement on its website on Tuesday saying that smaller investors who are new to trading on the stock market should pay close attention to potential risks, rather than just blindly following the trend.
China's A-share stock market has risen strongly in recent months, with the Shanghai Composite Index having surged by over 39 percent so far this year to seven-year highs, and this has encouraged a large number of people to open new accounts and start investing for the first time.
The number of new stock accounts reached 7.95 million in the first quarter, 433 percent more than in the same period of 2014, said the statement, citing data from the China Securities Depository and Clearing Corporation, the country's clearing services for all transactions in the A-share market.
"The market regulator's warning is due to the recent over-excitement among investors, which has led to higher risks," Yang Zhicheng, director of Shanghai Junsheng Asset Management Co, told the Global Times on Tuesday.
"The ongoing comprehensive reforms provide a better stock market environment for investors," Yang noted, adding "Government policies do not necessarily favor every industry, and there is too much margin trading in the stock market, which has made valuations unreasonably high."
"The current stock prices are obviously too high, and the CSRC needs to give warnings so as to avoid a market collapse," Yu Haihua, an investment advisor at Great Wall Securities Co.
Yang suggested that investors could give their money to professional institutions to manage their investments.
Daily turnover on the Shanghai and Shenzhen stock exchanges has frequently exceeded 1 trillion yuan ($161.12 billion) since March.
"The trading volume has reached a level that is too high, though it is hard to say what kind of trading volume would be appropriate," Yang said.