After watching Chinese stock prices gallop upward for months, Ding Xiurui wanted a piece of the action. The 45-year-old office worker stood in line at a bustling brokerage Friday to open her first trading account. She brought her sister, who opened an account too. They joined millions of other novice investors who are jumping into a market that has soared to dizzying heights, with prices up nearly 50% this year.
"We still can make money," Ding said as she stood at the counter at Tiantong Securities with the paperwork for her new account. Asked what stocks she would buy, Ding said, "I don't know. I'm still learning."
China is in the grip of stock market fever. Shares are changing hands in record numbers as first-timers pour in new money. Some are mortgaging their homes or dipping into retirement savings to finance a frenzy of trading known as "chao gu," or "stir-frying stocks."
This year's 50% rise in the main market measure, the Shanghai Composite Index, comes on top of a 130% increase in 2006. The market shrugged off a one-day drop of nearly 9% in late February that set off a decline in stocks around the world.
On Wednesday, the Shanghai index passed the 4,000-point mark for the first time, and economists say it could break 5,000 in a month. Trading volume Wednesday for Shanghai and China's second smaller exchange in the southern city of Shenzhen exceeded all other markets in Asia, including giant Tokyo.
Economists say the government should take steps to moderate the price surge or risk a sharp fall that could hurt millions of small investors.
"This is a very critical time. If policy adjustments take place now, the market can still have a sustainable development," said Hong Liang, a Goldman Sachs economist. "The longer they wait, the harder the eventual landing will be."
Enthusiasm for stocks is fueled in part by a lack of other investments in a heavily regulated economy.
Famously frugal Chinese families save up to 40% of their incomes, but bank accounts pay just 3% interest -- less than the rate of inflation. Some have made fortunes in the booming real estate market, but the government is cracking down on speculating to rein in soaring housing costs. Interest on bonds is low, and currency controls prevent most families from investing abroad.
On Friday, the government announced it will raise the amount that Chinese banks are allowed to invest in stocks abroad, possibly diverting some of the money pouring into domestic markets. But economists said the amounts involved will be too small to affect the country's money flows.
Regulators also have discussed raising interest rates on bank savings to make them more attractive and creating other new investment options but have announced no timetable. There is some talk of imposing a capital gains tax to cool off speculation, which alarms investors.
"I have a stable income but in China now a stable income doesn't mean a good life," said a 26-year-old government employee who was opening an account at Tiantong Securities and would identify himself only by the English name Leon. "Seeing other people earning a lot of money, all you can think is, you're earning so little and how can you make more?"
Around him, investors stood at automated terminals using magnetic identity cards to make trades. Others watched stock prices stream across overhead computer screens. In an adjoining room, about 150 people sat at rows of terminals for investors with at least 50,000 yuan ($6,000) in their accounts.
"We are opening 40 to 50 new accounts a day," said Zhang Jun, the branch's deputy manager. "Six months ago, it was four to five a day."
Nationwide, the number of trading accounts has soared by 30% over the past year to 95 million, one-sixth of them opened in the past four months, according to the China Securities Depository and Clearing Corp., which is owned by China's two stock exchanges.
On Wednesday alone, investors opened 552,559 new accounts, the company said.
The Chinese press has fueled the frenzy with get-rich-quick stories and accounts of the extremes to which investors are willing to go finance trading.
A 60-year-old cleaning woman in the southwestern city of Chongqing is being feted in the media as a market wizard after doubling her 20,000 yuan ($2,600) investment in two months.
"At a time like this, who can lose money?" the newspaper Chongqing Morning Post quoted her as saying.
The Beijing Youth Daily carried a photo of a Buddhist monk opening a trading account last week at a brokerage in the western city of Xi'an.
In Nanjing in the east, a man in his 70s mortgaged his apartment to raise 60,000 yuan ($7,800) to play the market, the Web site Shenzhen News Net reported.
"It might be dangerous, but who knows? People thought it was dangerous in March," Leon said.
China went through a similar boom in 1999, when soaring markets drew in millions of new investors. Prices plunged in 2001, wiping out speculators. State media reported suicides by indebted investors.
This time around, the boom is taking place against a backdrop of economic growth that is expected to top 10% this year. Profits at China's banks, oil refiners and other big companies are growing at an annual rate of 20% to 40%.
"You can't really say this market is a bubble," said Goldman's Liang.
Stock prices are 30 to 40 times earnings, an unusually high ratio for many major markets, which some say makes them unrealistic.
"But that is not paying attention to earnings growth, which is very, very strong," Liang said.
And many investors believe Chinese leaders will prop up prices to avoid turmoil ahead of a key Communist Party meeting in late 2007 and the Beijing Olympics next year.
"We hear that before 2008, the government won't let prices fall," said Ding's sister, Ding Jingxian. "We're not afraid."