Chinese stock market wraps up stunning, volatile year but uncertainties abound

China's markets still exist mostly to raise money for state companies _ the reason they were set up in the early 1990s.

In 2007, PetroChina, coal miner China Shenhua Energy Co. and China Construction Bank Corp. heeded the government's call to return to local capital markets to raise funds and improve the quality of listed companies.

Among the IPOs up next: China Mobile, the country's largest mobile service provider, which plans to raise US$10 billion (€7 billion) or more in a listing in coming months.

Reforms aimed at combatting rampant price manipulation and other abuses, improving shareholding arrangements and strengthening corporate disclosure requirements helped restore investor confidence after years of devastating scandals kept share prices mired in multi-year lows.

But as far as Zhou is concerned, they haven't gone far enough.

"Listed companies in China seem to have more freedom than elsewhere to choose what they want or don't want to disclose," he says. "That's so unfair to investors, especially our individual investors."

Still, many analysts and investors remain bullish about China, given its booming growth. The economy is forecast to grow close to 11 percent next year once again, despite efforts to curb investment and cool inflation.

"Don't be too panicked about the experience with PetroChina," says Chen Huiqin, an analyst at Nanjing-based Huatai Securities. "The IPOs of big state-owned companies are still full of potential."

Since mid-October the market has slumped after regulators, fearing that prices were rising too quickly, suspended sales of mutual funds to new subscribers.

That ban ended in late December, spurring a modest rally, but prices so far show no signs of shooting skyward. Since hitting a record of 6,124.04 on Oct. 16, the Shanghai index has fallen 14 percent. On Friday, the last day of trading for the year, it closed at 5,261.56 points.

Wang Mingxuan, a 53-year-old retiree, said she's pleased so far with how her investments have fared, despite the recent market doldrums.

She isn't counting on an Olympics rally, but nonetheless is betting on stocks whose businesses should benefit from the Games, such as China Telecom and Air China. The latter is an Olympics sponsor.

"But the risk is always very high, and the government can't protect you," Wang said while watching the price boards scroll by at a Beijing brokerage. "You come here for a fight, not for fun. You should learn things about the market or else nobody can help you."

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