The story is recounted around the trading halls of China: an elderly investor, under the stress of watching the funds bounce up and down on the stock market, succumbed to a heart attack and died.

In the past year, millions of Chinese have gleefully plunged into the stock market in the hope of making a fortune, but now experts are warning that investors should not immune themselves from risks even in a bullish market.

"Developing the capital market is an important step in the reform of China's financial system," said Yin Jianfeng, a financial expert with the China Academy of Social Sciences (CASS).

"But the government and securities dealers should ensure investors are well informed of the risks when drawing large sums of money from their savings accounts for stock investment," Yin said.

After four years in the doldrums, China's stock markets began to rebound at the beginning of 2006, with the benchmark Shanghai Composite Index almost more than doubling in a year.

The number of new trading accounts opened by individuals in the Chinese mainland's two bourses reached five million in the first quarter this year, compared with 3.08 million for the whole of last year.

However, investors are warned to curb their enthusiasm with a bit of education.

"A great number of investors are not aware of the risks they are exposed to and do not know how to keep risks under control," said Shang Fulin, chairman of the China Securities Regulatory Commission (CSRC).

Stories abound of novices, coming into the trading hall for the first time, requesting the percentage interest a fund pays; retired couples spending all their savings, speculating on the stock market; and young people pawning their apartments for loans to invest in stocks.

Last month the CSRC launched an education campaign targeted at stock and fund investors, requiring securities dealers to ascertain their clients' personal circumstances and to provide them with specially-made warning notes.

The notes explain the difference between investment funds and savings and tell people to invest in a way commensurate with their financial resources, and to avoid the high risks of gambling away money saved for their old age.

"The education campaign will help protect the investors' interests and lay a foundation for the sustained and stable development of the Chinese capital market," Shang added.

Earlier this year, the People's Bank of China, or the central bank, compiled the book Financial Knowledge for the Public, which states in the preface, "China's financial industry will develop in a safe and healthy way if everybody gets down to learning some financial knowledge."

For months the book has been among the best-sellers in the Beijing Books Building, said Wei Wei, a saleswoman with the bookstore, one of the capital's largest.

"Books on securities investment are also enjoying a bullish market here, with sales soaring almost 100 percent to 1.54 million yuan (197,400 U.S. dollars) in the first quarter this year," said Wei.

But a 72-year-old man surnamed Shen, who claimed to be an experienced stock investor, told novices in a Beijing branch of China Minzu Securities Co. Ltd. that "by reading, you can only learn some basic knowledge, but stock investment is like a chess game where there is always a possibility of losing."

A week ago Shen had managed to persuade a woman ten years older than him out of investing in the stock market when she came to the trading hall, asking what books she should read to pick up the rudiments of stock investment.

"The 82-year-old woman intended to put her life savings into the stock market and seemed to know nothing about the risks," said Shen. "For a person who has no ability to resist risks, reading books does not help."

Zuo Xiaolei, chief economist with China Galaxy Securities Co. Ltd., said, "It is good for the new investors to turn to books for securities knowledge, but many books are about short-term investment, and the Chinese capital market needs rational investment rather than speculation.

"The Chinese stock market is still immature, and often seesaws up and down," said Zuo. "Some shares are hyped up far beyond their true worth and many people's money will be tied up once there is an adjustment.

"A lot of people mistake the education campaign as teaching investors about how to choose a stock or fund that will yield high returns, but the campaign was actually launched to tell everyone that they invest their money at their own risk."

On February 27, Chinese shares dropped sharply on profit-taking, with the major Shanghai index down 8.84 percent, the biggest daily drop in 10 years. But they bounced back the next day as the index gained 3.94 percent.

Li Yang, director of the CASS Institute of Finance and Banking, said, "Mass hysteria and excessive speculation may hinder the development of China's securities market and undermine the stability of the financial industry."