Despite Alan Greenspan’s warning that the market was due for a correction, Shanghai’s stock market index topped 4000 today. So far this year the Chinese stock market has doubled. Since 2006 it has quadrupled. The main driving force behind the surge has been an odd form of democracy.
Equity investing has spread widely from the traditional world of professional investors and businesspeople to include students and pensioners. Last week ordinary Chinese were opening stock market accounts at the rate of 300,000 a day, causing one wag to opine that “buying shares was the new Chinese national pastime.”