Is China Too Hot to Handle?

The Chinese government takes steps to put a lid on an overheated stock market.

New Chinese investors are rushing into the stock market like buyers trying to get their hands on an Apple iPhone or Nintendo Wii.

An average of 300,000 new brokerage accounts for investing in mainland equities and mutual funds were opened daily in the second quarter of this year, according to official statistics. By the end of June, retail brokerage accounts totaled more than 105 million. On some days, investors opened as many as half a million new accounts.

The Chinese stock markets have been on a tear. The benchmark Shanghai Composite Index rose from just 1,400 points in May of 2006 to over 4,300 points by …

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