China stocks

China's stocks have eventually declined since May 30 when the government tripled the stamp duty on securities trade. The index for RMB-denominated A shares listed on Shanghai & Shenzhen exchanges yesterday dropped nearly 8% and today another 6.4% (to 3287). The benchmark has tumbled 21% from its May 29 peak.

Personally, I think it's a healthy movement as it is widely believed that China stocks have bigger & bigger bubble, which is doubled this year. It seems to me that many of the new comers are poor but greedy individuals who is thirst for making quick money but without much knowledge of the risk. Hearing the successful stories of their neighbours for having made 20% or higher profile from the stocks, they're rushing to open account and dumping in their hard-earned money. With so many people's blindly believing without reason that the market continues bullish till 2008, it indeed keeps breaking its record high despite financial experts have been prompting the bubble warnings. I insisted on that these people are not the rich ones who 'invest' with reason but those who 'gamble' -- I don't even call it speculation. Once the bubble burst, they are not prepared for the lost and can blame anything but their losing sense, so they will cause social & political problems and eventually damage the state economy.

The earlier decline helps to cool down and educate people, before it's too late to retrieve. I don't think China can afford the unstabilization caused by millions of stock losers one day.