Investor confidence soared recently as the Hang Seng Index was at its highest level ever, but caution has been advised Hong Kong's Hang Seng Index surged to a record high following the unveiling of a comprehensive investment package by Donald Tsang Yam-kuen in his first policy address after re-election as chief executive. With an ambitious plan to spend HK$250 billion on 10 major infrastructure projects including railways and roads, the buoyant mood in the wake of the speech helped push the Hang Seng index past 29,000 points for the first time ever last week. Following the expansion of the qualified domestic institutional investor (QDII) scheme in August, which allows mainland investors and banks to trade Hong Kong shares, billions of dollars have been pumped into the local stock market. Increasing numbers of people from all walks of life are investing in the stock market. With mainland companies registering impressive gains on their trading debuts on the local stock exchange, there has been a sharp increase in the number of initial public offerings (IPOs) in Hong Kong. Last year, the IPOs of several mainland banks received an overwhelming response from the public. Before their public listing on the local bourse (stock exchange), long queues of eager small investors can be seen outside banks across the city. Investors are confident that the stock market has rebounded from the nadir of the 1997 Asian financial crisis. Across the border, the successive bull runs (a large volume of investment) on the Shanghai and Shenzhen stock markets have also swelled the ranks of speculators. According to a report in the People's Daily in April, there were upwards of 2,535 million new registered investors on the mainland in March. Rags-to-riches stories of small-time investors and myths of overnight fortunes to be made in the stock markets have spread via the internet to major cities and even rural communities. Books with financial tips such as Rich Dad, Poor Dad and biographies of Warren Buffett are best sellers in mainland bookstores. People of different classes, from farmers to office workers, pour their life savings into stocks and bonds, with many not having even a smattering of stock market or investment knowledge. As increasing numbers of investors with a penchant for the markets move away from traditional banks, the rate of deposit growth in mainland China slowed this year. This is an anomaly considering that Chinese people have long relied on banks. On August 9, the capitalisation of mainland bourses in Shanghai and Shenzhen surpassed 21.14 trillion yuan, topping last year's gross domestic product (GDP) of 21.09 trillion yuan for the first time. With the combined capitalisation of the two markets surpassing Hong Kong and Tokyo bourses, mainland China has become the seventh-largest stock market in the world. However, the mood may not remain buoyant for long. Bankers and financial analysts have warned that the pace of investment is unlikely to continue. The media carries warnings to small-time investors of an imminent market crash but who may unwittingly contribute to market instability. Many of the individual investors on the mainland are investment novices with no real knowledge of how to spread out the risk with their investments. This has led some financial analysts to voice concerns that fluctuations in the stock market will have repercussions on the lifestyles of ordinary working people who may have over-extended themselves. Investors would be wise to to bear in mind the saying 'what goes up, must come down' and exercise caution in their investments. Word power Match the following words with their meanings on the right. 1 overwhelming 2 nadir 3 successive 4 smattering 5 penchant 6 imminent a slight knowledge of something b about to happen, likely to happen very soon c coming one after the other in an unbroken series d very great, considerable e lowest point f liking or taste for something Fill in the blanks with the words you have learned. 7 She has a ______________ for Indian food. She loves its spicy taste. 8 Being declared bankrupt was the ___________ of his life. 9 The school's superb football team has scored _____________ wins in the inter-school tournaments over the past few years. 10 Faced with an ___________ environmental disaster, governments the world over have been racing against time to tackle pollution problems and find alternative sources of energy to lessen the severe fuel crisis. 11 How can I communicate with the mainland tourists without even a ____________ of Mandarin? 12 Spurred by the _______________ response, the dance troupe has decided to stage two more performances next month. Language focus The use of compound adjectives A compound adjective can be formed by linking several words together with hyphens. Below is an example from the passage: Rags-to-riches stories of small-time investors and myths of overnight fortune made in the stock markets have spread via the internet to major cities and even rural communities. Choose the suitable compound adjectives below to fill in the blanks. no-holds-barred/warts-and-all/shaggy-haired 13 Pulling no punches in criticising the shortcomings of the former president, the author's unofficial biography is a ___________________ portrayal of the previous administration. 14 The __________________ boy wearing baggy trousers is my counsin. 15 The US is renowned for its free press. American newspapers always take a _________________ approach to reporting on the Bush administration. Answers 1. d, 2. e, 3. c, 4. a, 5. f, 6. b, 7. penchant, 8. nadir, 9. successive, 10. imminent, 11. smattering, 12. overwhelming, 13. warts-and-all, 14. shaggy-haired, 15. no-holds-barred Think about 1 Have you been involved in any speculative activities like gambling and buying stocks? 2 With cynics voicing concerns about the overheated mainland Chinese economy, do you think the investment bubble is about to burst? 3 What do you think about the investment craze in China and gambling boom in Macau? Do you think the social costs outweigh the financial gains generated by the boom? 4 How can you be a smart investor?