SHANGHAI: There are now 100 million trading accounts in the Chinese stock market, prompting experts to warn that new investors should be cautious about entering the fray.

The China Securities Registration and Settlement Company said that although more than 100 million accounts had been opened, there were no more than 50 million traders.

"The explanation for this is that an investor can open several accounts at both the Shanghai and Shenzhen exchanges, and many accounts are inactive," said Wei Qiang, an analyst at UBS.

Wei warned new investors to be careful when investing in the stock market. He cited the results of a recent survey by ChinaHR.com, a Web-based headhunting company, which found that most of the white-collar workers who have tried to get a piece of the currently bullish market had little or no knowledge about stock trading.

The survey involved more than 2,500 office workers in more than 20 business sectors from across the country, The survey sought to gauge their attitudes towards stock investment.

More than 90 percent of those questioned said relatives and friends had invested in the stock market, and 46 percent of them had opened their own accounts.

"Surprisingly, 56 percent of these investors admitted that they had only a vague understanding or superficial knowledge of the stock market," said Lei Jia, the PR manager of ChinaHR.com.

She added that 24.5 percent of the investors said they did not know how the stock market operates.

A little more than 19 percent of those interviewed said they fully understood the stock market.

"I entered the market two months ago after my friend strongly encouraged me. I know nothing about the stock charts," Wang Zheng, an editor working for a publishing company, said.

He added that his friend told him what stocks to buy and sell.

Zhou Yuan, a financial analyst at ChinaHR.com, said many of the uninformed investors were speculating, which had allowed bubbles to form in the market.

He added that many new investors saw the rosy side of the market and were pursuing their investments blindly, but succeeding as a trader requires an understanding of finance and an ability to weigh risks.

"Without knowledge, immature investors might lose money," he warned.

The survey also showed that 60 percent of the investors had an average monthly income of less than 3,000 yuan ($375), and that the money they invested in the market came from their bank savings.

Lei said the survey also revealed the attitude many new investors have about balancing work and stock trading.

A majority - 80.5 percent of those surveyed - said they considered investing as a way to supplement their regular earnings.

(China Daily 05/31/2007 page5)