Middle- and low-income earners accounted for 70 percent of China's 136 million investors last year, a report released by the Securities Association has said.

The report said more than 32 million new stock accounts were opened last year, ten times more than in 2006.

In addition, almost ten percent of the new investors who entered the market last year said they never considered possible financial losses - demonstrating a degree of immaturity about market conditions, the survey said.

Sole traders accounted for 48 percent of all investors on the stock market and 98 percent of those on the fund market.

The Beijing-based Securities Association conducted two surveys at the end of last year - one on China's stock market investors and a second on fund investors - in an attempt to paint a clearer picture of the investor landscape.

Huang Xiangping, president of the association, said: "China's capital market has a high proportion of middle- and low-income investors, who have little awareness of their rights as shareholders. Most of them are just interested in short-term speculation."

The report showed that middle- and low-income investors, with monthly incomes of less than 5,000 yuan (US$690), accounted for nearly 70 percent of all investors.

China's stock market was considered bullish last year.

The benchmark Shanghai Composite Index rose 93 percent from 2,728 points in Jan to 5,261 on Dec 28.

Analysts said this surge was the lure for many investors, who saw an opportunity to make large profits but did not consider the risks. A bullish market cycle generally lasts about 20 months, but China's remained for 29 months, analysts said.

The bull-run will continue this year, but the chances for speculative profit will be slimmer, analysts have said.

And with the more tightening policies to come, investors are warned to be selective.

"A sound stock market depends on its system of investor protection," Huang said.

"It is imperative shareholders are equipped with basic knowledge about securities."

(Xinhua News Agency January 16, 2008)