'Quite Solid'

On the mainland, no one is moving into stocks faster than individuals, who are restricted from buying abroad. Ding Xiulan, a retired engineer from Shanghai, put half of her savings in shares and is counting on more gains in 2007.

"The market outlook still looks quite solid," said Ding, 67, whose holdings include ICBC and Baoshan Iron & Steel Co., the country's biggest steelmaker. "Stocks offer much higher returns than China's other limited investment options, such as property and bonds."

Chinese investors pumped about 150 billion yuan into mutual funds and spent 100 billion yuan on stocks in the last six weeks of 2006, Credit Suisse Group estimates. Mainland funds held 580 billion yuan of assets at the end of June, it said.

Money has also been pouring into Chinese stocks from international buyers. Funds focused on China took in $1.3 billion during the first two weeks of the year, almost triple the amount for the rest of Asia excluding Japan, according to Emerging Portfolio Fund Research Inc. in Boston. Half of the record $22.4 billion invested in emerging-market funds last year went to China funds.

`Very Elevated'

"Sentiment in both the A-share and H-share markets is really very elevated, and consequently so are the risks," said Ajay Kapur, Citigroup's chief global equity strategist, based in New York.

Edmond Huang, an analyst for UBS in Shanghai, said Jan. 15 that the Shanghai Composite Index may fall as low as 2185 this year. His projection is 23 percent below last week's close for the index, tracking the bigger of China's two stock exchanges.

HSBC's Garry Evans says there's a 30 percent chance of a "major correction" in the first half.

"There's just been a tremendous inflow of capital into the mainland market," said Evans, HSBC's Hong Kong-based head of Asian equity strategy. "Things are getting bubbly."

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