It's true, we haven't used the terms "parabola" and "asymptote" in the same sentence since graduate school...or was it high school? Either way, the Shanghai Stock Exchange Composite has come utterly 
unhinged. See the 5-year at right and don't adjust your monitor if you get a sense of vertigo; it's a common consequence of looking straight up at something this vertical!
Clicking through Saturday's Barry Ritholtz Linkfest, we were reminded of an AP blurb from the previous weekend. This is a bubblicious classic, with a few characters straight outta central casting. Ultimately, it's not the chart per se that screams bubble.* It's the participation of millions of new investors--and what those investors are saying about the market.
Here are the AP's opening paragraphs:
After watching Chinese stock prices gallop upward for months, Ding Xiurui wanted a piece of the action. The 45-year-old office worker stood in line at a bustling brokerage Friday to open her first trading account. She brought her sister, who opened an account too. They joined millions of other novice investors who are jumping into a market that has soared to dizzying heights, with prices up nearly 50% this year.
"We still can make money," Ding said as she stood at the counter at Tiantong Securities with the paperwork for her new account. Asked what stocks she would buy, Ding said, "I don't know. I'm still learning."
From the time-honored script:
"I have a stable income but in China now a stable income doesn't mean a good life," said a 26-year-old government employee who was opening an account at Tiantong Securities and would identify himself only by the English name Leon. "Seeing other people earning a lot of money, all you can think is, you're earning so little and how can you make more?"
Again:
A 60-year-old cleaning woman in the southwestern city of Chongqing is being feted in the media as a market wizard after doubling her 20,000 yuan ($2,600) investment in two months.
"At a time like this, who can lose money?" the newspaper Chongqing Morning Post quoted her as saying.
But then, this market might not be--or behave--like other markets:
"We hear that before 2008, the government won't let prices fall," said Ding's sister, Ding Jingxian. "We're not afraid."
You have to wonder what the VIX and Put/Call might look like in Shanghai these days.
UPDATE: The Chinese government buying a stake in Blackstone Group? What Gaffen (and others) said.
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* Yes, we're aware of China's rapid growth and that even at these elevated levels valuations aren't as nutty as many U.S. tech-sector multiples were in the late 1990s. But we're not sure that's the most reassuring comparison! From where we sit, Shanghai just doesn't seem to have much (or enough) risk premium these days. To paraphrase Charles Barkley, we may be wrong, but we doubt it.
Source
"First-Time Investors Snap Up Chinese Stocks," Associated Press, May 13, 2007
Tamora Vidaillet, "Blackstone hopes China will bet on its funds," Reuters, May 21, 2007