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China's stock-market boom is unlikely to stall yet as rising corporate earnings and low returns on bank deposits encourage investors to put more of their savings into equities, according to Christopher Wood, global equity strategist at CLSA Ltd.

"China's A shares are likely to head inevitably, unless there's some big external shock globally, into full-scale mania,'' said Wood, who is the No. 2 ranked Asian strategist according to Institutional Investor. Stock valuations may reach "70 to 80 times'' profit before the rally ends, he said yesterday at a conference in Shanghai hosted by CLSA, the Asian securities arm of France's Credit Agricole SA.

China's benchmark CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, is valued at 41 times reported earnings. The benchmark has surged 78 percent this year, after more than doubling in 2006.

Wood, who is based in Hong Kong, said A shares could mirror Taiwan's stock market in the late 1980s. The island's Taiex Index jumped more than 10 times from the start of 1987 to a record 12,495.34 in February 1990. The measure last month closed above 8000 for the first time in six years.

The Shanghai Composite Index, which tracks shares on the larger of China's two stocks exchanges, has quadrupled since a five-year slump ended in July 2005. It reached a record 4049.70 May 10, up from 1011.50 at the start of the rally.

China's stock market surge is "not entirely speculative'' as domestically listed companies' earnings rose 34 percent in 2006, Marshall Gittler, chief Asian strategist at Deutsche Bank Private Wealth Management, said yesterday in a research note. About 60 percent of the companies reported profit increases in the first three months of this year, he wrote.

Editor: Yan