That means a growing number of ordinary investors can reap profits from the bullish market.

It is a pleasant scenario, but only if we take a short-term view.

In the long run, a continual rise in the number of retail investors may worsen a structural problem that has haunted the yuan-denominated A-share market for years: an imbalance between the power of institutional and retail investors.

The mainland market is dominated by retail investors, who hold 60 percent of the total trading shares.

By comparison, international markets feel the power of large corporate investors.

In Hong Kong, which also hosts a number of Chinese enterprises, institutional investors make nearly 70 percent of transactions. New York, London and many other places present a similar picture.

Instead of better protecting the interests of small investors, a retail-led stock market is likely to let valuation surge ahead of itself. Unlike corporate investors, which are known to remain cool headed and calculate a stock's value on its performance, retail investors have a reputation for sometimes irrational and speculative decisions.

And that has already happened on the mainland. By doubling in just 10 months, the mainland market now shows signs of an emerging bubble.

There is a great need to address that problem.

To balance the power of the two groups of investors, we should not simply limit retail investors. After all, they have a right to invest.

The government should review market regulations and increase the role of institutional investors, including banks, insurers, fund managers and social security funds.

The regulator could consider raising the proportion that institutional investors could buy in initial public offerings.

(For more biz stories, please visit Industry Updates)