Speculative risks rising, regulator warns

Securities officials warned on Friday of growing speculative risk in the country's stock market after a surge of 18 percent in just two weeks.

"We have noticed rising manipulation and speculation in the market and we will step up a crackdown on these activities to better protect investors' interests," Deng Ge, a spokesman for the China Securities Regulatory Commission, told a news conference in Beijing.

The CSRC ordered stock brokerages to provide proper guidance to clients, and it also warned retail investors not to engage in risky practices such as "borrowing money or selling houses to buy stocks".

The benchmark Shanghai Composite Index rallied 18.1 percent in the past two weeks while the Shenzhen market jumped 6.9 percent.

The rise has been largely led by large-cap stocks in the financial, real estate and mining sectors. The average price-earnings ratio of the A-share market is about 20 times, he said.

Small retail investors, defined as those with portfolios of less than 100,000 yuan ($16,300), have a higher value of net purchases than institutional investors, he added.

In the past two trading weeks, institutional investors had net stock purchases of 30.9 billion yuan while the value for individual investors was 65.9 billion yuan, according to the regulator.

Also on Friday, the CSRC issued two new guidelines.

One guideline covers the launch of stock options trading. The other guideline expands a pilot program of corporate bond issues to all joint-stock companies. Previously, only listed domestic companies could issue bonds.