Stocks News
- Stock bubble may be building: top banker
Date: 8-May-2007 Sources: (Shenzhen Daily)
CENTRAL bank governor Zhou Xiaochuan acknowledged Sunday that a bubble in the country's stock market was a concern and said the central bank was monitoring asset prices along with inflation.
China's main stock index, the Shanghai Composite Index, has surged about 235 percent since the start of 2006 and more then 40 percent so far this year, but has also shown some volatility, including a 9 percent fall in February.
The values of many stocks relative to company earnings are high compared with international benchmarks and historical levels.
Asked if he was concerned about the build-up of a bubble in China's stock market, Zhou said, 'Yes.'
'For currency stability, we watch over CPI (Consumer Price Index), PPI (Producer Price Index) and also asset prices,'said Zhou, governor of the People's Bank of China, in Basel, Switzerland, where he's attending a meeting of world central bankers.
The securities regulator in March barred companies from using proceeds from share sales to invest in stocks in an attempt to damp speculative buying.
The stock-market boom has encouraged Chinese households to spend a larger proportion of their 16.2 trillion yuan (US$2.1 trillion) in savings on stocks and mutual funds.
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