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The Public Safety office announced that the well-equipped 1,800 federal agents were sent to Michoacan state on Saturday, in a battle there mainly against the Knights Templars, a splinter group of the La Familia drugs cartel.

National Security Council spokesman Alejandro Poire said it was a "reinforcement operation faced with the possibility of greater mobilization by organized crime groups."

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Poire reiterated that it were these criminals, not the government's crackdown on organized crime, that has caused waves of drug gang-related violence. More than 35,000 people have died since President Felipe Calderon stepped up the fight against organized crime in 2006, according to official figures.

"The violence won't stop if we stop battling criminals," Poire said. "The violence will diminish as we accelerate our capacity to debilitate the gangs that produce it."

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At least 20 people were killed and five injured when gunmen opened fire in a bar late Friday in the northern city of Monterrey, where the Zetas gang is fighting its former ally, the Gulf Cartel, according to Alejandro Poire.

Eleven bodies were found earlier Friday near a water well on the outskirts of Mexico City, where the gang is fighting the Knights Templar, an offshoot of the La Familia gang that has terrorized its home state of Michoacan, said Poire.

Poire added another 10 people were found dead early Saturday in different parts of the northern city of Torreon, where the notorious Zetas are fighting the Sinaloa cartel.

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Britain's Prince William and his wife Catherine arrived in Los Angeles on Friday for a three- day swing through Southern California.

California Governor Jerry Brown and Los Angeles Mayor Antonio Villaraigosa were at the scene to welcome the royal couple who came from Canada where they had spent a week.

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Upon their arrival, the newlywed Duke and Duchess of Cambridge will attend Variety magazine's Venture Capital & New Media Summit at the Beverly Hilton. The event will include British and American technologists and venture capitalists working to find new avenues for investment and job-creation in the United States and Britain.

A reception at the British Consul-General's residence will give William and Catherine an opportunity to meet what a British statement called "California's political, business, and philanthropy leaders."

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As the royalty fever will grip Southern California, the Los Angeles Police Department said it would crack down on anyone roaming into prohibited areas without permission.

The couple's visit is aimed at showing support for "the UK's prosperity agenda, which is seeking to create jobs and investment by deepening the strong bonds between the U.S. and UK," according to the British Consulate in Washington, D.C..

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The visit will strengthen ties between the countries' respective Armed Forces, "particularly on veterans issues, including reintegration into society, and create and tighten relationships in the charitable sector," the consulate said.

The tour will build on "the momentum of Prince Harry's visit last year, The Prince of Wales' visit this spring and the state visit (to England) by President (Barack) Obama," said the consulate.

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The People's Bank of China (PBOC), the central bank, announced on Wednesday that it will raise bank's benchmark one-year borrowing and lending rates by 25 basis points on Thursday.

This is the third time for the central bank to raise interest rates this year. The previous one occurred on April 5.

Meanwhile, the central bank has hiked the reserve requirement ratio for banks six times this year.

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The move raises the benchmark one-year deposit rate to 3.50 percent and the one-year benchmark lending rate to 6.56 percent.

Inflation data for June will be released on July 15 and many economists forecast it will hit a new high above 6 percent.

Food prices have been increasing, some dramatically. Pork prices rose for the 10th consecutive week as of June 26 and the wholesale price of pork was up 68 percent from a year earlier, according to the Ministry of Commerce
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China will continue to implement a prudent monetary policy as inflationary pressures still remained high, said a statement on the website of the central bank on Monday.

The Consumer Price Index (CPI), a main gauge of inflation, rose by 5.5 percent in May from the previous year, setting a 34-month high and well above the government's target ceiling of 4 percent for the year.

The country's top economic planner said recently that overall price levels will be higher in June than May.

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The interest-rate hike will help check high inflation and the June CPI data will be 6.2 percent, Lu Zhengwei, chief economist for the Industrial Bank, predicted.

Xu Xiaonian, an economics professor at China-Europe International Business School, wrote in his microblog that the scale is small and even with a 250-basis-points hike, the real interest rate would still be negative.

The real interest rate is the nominal interest rate minus the inflation rate.

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After this hike, further such moves will not be likely within this year and the need to again raise bank's reserve requirement ratio will also be low, said Zhu Jianfang, chief economist with CITIC Securities.

But Li Xunlei, an analyst at Guotai Junan Securities in Shanghai, forecast there will be another interest-rate hike in the third quarter.

Guo Tianyong, a professor with the Central China Finance University, said the move is necessary as it can help correct the negative interest rates and manage inflation, but it can also slow economic growth and precipitate inflows of speculative hot money.

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The interest-rate hike is not good news for local governments, as they will have to pay higher interest on their debts.

Local government debt totaled 10.72 trillion yuan (1.66 trillion U.S. dollars) at the end of 2010, said an audit report late June.

It's high time to test the local governments (to deal with the debts) as risks of local government debt defaults are increasing, said Xie Guozhong, an independent economist in China.
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China's fiscal revenue growth is expected to slow down in the later period of the year, Finance Minister Xie Xuren has said.

Policies such as higher exemption threshold for individual income tax and tax breaks for small-sized firms with thin profits will reduce fiscal revenue, according to a statement posted on the ministry's website on Saturday, citing Xie's address at a meeting held on Friday.

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Fiscal revenue rose fast in the first half of the year as the country's economy was running generally well toward the direction of macro controls, he said.

Government data showed fiscal revenue rose 34 percent year-on-year in May, faster than 27.2 percent in April and 26.7 percent in March.

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However, the economic development faced complicated situation both at home and abroad, with many unstable and uncertain factors, he added.

Also at the meeting, he asked local authorities to take water projects as a major sector for fiscal expenditure and increase investment.

He called for government spending to take the leading role and encouraged social capital into the sector to ensure that annual investment in water projects double the level for 2010 in the following 10 years.

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Further, he said low-income housing, education and social securities should be the priorities for fiscal spending in 2012.

Governments should strictly control expenditure on vehicle purchases and maintenance, overseas trips and official receptions, he said, asking authorities to publicize budgets to improve transparency.

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The Republic of South Sudan declared independence Saturday and China immediately established diplomatic ties with the world's newest country.

China, as a responsible big country and a friend of both north and south Sudan, has played a unique and constructive role in pushing forward their peace and development for many years.

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China was a witness to the forming of the Comprehensive Peace Agreement between north and south Sudan. During a long period, China, along with the rest of the international community, has respected the will and choice of the people of both sides, and made arduous efforts in helping them realize peace and turn away from war.

China has actively participated in U.N. peace-keeping missions in Sudan, and it sent a team to observe the referendum on south Sudan's destiny in January at the invitation of both sides.

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In May, after armed conflicts broke out between north and south Sudan, China worked hard to help end the conflicts.

Chinese Special Envoy on African Affairs Liu Guijin visited Sudan in June to persuade both sides to prevent further clashes.

The fundamental reason behind China's effective work is China has kept an impartial attitude in dealing with both sides and maintained a focus on their long-term interests and regional peace and stability.

As Liu said during his visit, "China is ready to exert joint efforts with Sudan to find solutions to the outstanding issues for sustainable peace in Sudan and for creating stability in the region in the long run."

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For many years, China has provided aid within its capacity for north and south Sudan for their economic and social development, and established a good model of South-South cooperation.

China has helped Sudan build a complete oil industry in 16 years, trained many workers, offered humanitarian assistance to north and south Sudan, established hospitals and schools, and dug wells to help locals improve their living standards.

In comparison with Western countries' aid, China's assistance to north and south Sudan, although limited, is sincere and comes without preconditions, something that is appreciated by the people of both sides.

The China-Sudan friendship, which has been tested over more than half a century, will surely be carried forward in the future.

Sudanese President Omar al-Bashir said his government would enhance the friendly relations with China after south Sudan became independent.

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President of South Sudan Salva Kiir also says his government and people consider China a sincere friend and reliable partner. He said South Sudan was willing to further relations with China after it declared independence and welcomed investment from Chinese enterprises.

Meanwhile, as Sudan and South Sudan both face severe challenges after the latter became independent, their development relies on the support from the international community.

Sudan's economic development model badly needs transformation after the oil-rich southern part was separated from the country. South Sudan's development lags behind its northern neighbor with underdeveloped infrastructure and an inexperienced new government.

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China has maintained good relations with both parties and has been participating in Sudan's construction in energy, agriculture and infrastructure.

In the future, China will play a particular role in enhancing the communication and cooperation between Sudan and South Sudan and the economic construction of the two countries.

"After South Sudan declared independence, China will continue to develop the friendly, cooperative and win-win relations with north and south Sudan. China will work with the rest of the international community to actively participate in the reconstruction of South Sudan," Liu told Xinhua on June 22 after his visit.

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Lisa Grande, U.N. humanitarian chief in South Sudan, said China had advantages in the construction of infrastructure such as roads, bridges and the power grid in Sudan and South Sudan. China, through its projects, could communicate with the two peoples and facilitate the mutual trust and cooperation between the two parties, she said.

However, some Western countries have accused China of using its relations with the two countries for "plundering energy resources."

Such criticism will not impede China's determination and efforts to help people from Sudan and South Sudan realize their countries' peace and development

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Mexican authorities on Saturday sent reinforcements of 1,800 police troops in the fight against drug cartels, after more than 40 people were found dead in three Mexican cities over the past two days as drug gang fighting intensified, local media reported.

The Public Safety office announced that the well-equipped 1,800 federal agents were sent to Michoacan state on Saturday, in a battle there mainly against the Knights Templars, a splinter group of the La Familia drugs cartel.

National Security Council spokesman Alejandro Poire said it was a "reinforcement operation faced with the possibility of greater mobilization by organized crime groups."

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Poire reiterated that it were these criminals, not the government's crackdown on organized crime, that has caused waves of drug gang-related violence. More than 35,000 people have died since President Felipe Calderon stepped up the fight against organized crime in 2006, according to official figures.

"The violence won't stop if we stop battling criminals," Poire said. "The violence will diminish as we accelerate our capacity to debilitate the gangs that produce it."

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At least 20 people were killed and five injured when gunmen opened fire in a bar late Friday in the northern city of Monterrey, where the Zetas gang is fighting its former ally, the Gulf Cartel, according to Alejandro Poire.

Eleven bodies were found earlier Friday near a water well on the outskirts of Mexico City, where the gang is fighting the Knights Templar, an offshoot of the La Familia gang that has terrorized its home state of Michoacan, said Poire.

Poire added another 10 people were found dead early Saturday in different parts of the northern city of Torreon, where the notorious Zetas are fighting the Sinaloa cartel.

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Britain's Prince William and his wife Catherine arrived in Los Angeles on Friday for a three- day swing through Southern California.

California Governor Jerry Brown and Los Angeles Mayor Antonio Villaraigosa were at the scene to welcome the royal couple who came from Canada where they had spent a week.

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Upon their arrival, the newlywed Duke and Duchess of Cambridge will attend Variety magazine's Venture Capital & New Media Summit at the Beverly Hilton. The event will include British and American technologists and venture capitalists working to find new avenues for investment and job-creation in the United States and Britain.

A reception at the British Consul-General's residence will give William and Catherine an opportunity to meet what a British statement called "California's political, business, and philanthropy leaders."

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As the royalty fever will grip Southern California, the Los Angeles Police Department said it would crack down on anyone roaming into prohibited areas without permission.

The couple's visit is aimed at showing support for "the UK's prosperity agenda, which is seeking to create jobs and investment by deepening the strong bonds between the U.S. and UK," according to the British Consulate in Washington, D.C..

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The visit will strengthen ties between the countries' respective Armed Forces, "particularly on veterans issues, including reintegration into society, and create and tighten relationships in the charitable sector," the consulate said.

The tour will build on "the momentum of Prince Harry's visit last year, The Prince of Wales' visit this spring and the state visit (to England) by President (Barack) Obama," said the consulate.

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The People's Bank of China (PBOC), the central bank, announced on Wednesday that it will raise bank's benchmark one-year borrowing and lending rates by 25 basis points on Thursday.

This is the third time for the central bank to raise interest rates this year. The previous one occurred on April 5.

Meanwhile, the central bank has hiked the reserve requirement ratio for banks six times this year.

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The move raises the benchmark one-year deposit rate to 3.50 percent and the one-year benchmark lending rate to 6.56 percent.

Inflation data for June will be released on July 15 and many economists forecast it will hit a new high above 6 percent.

Food prices have been increasing, some dramatically. Pork prices rose for the 10th consecutive week as of June 26 and the wholesale price of pork was up 68 percent from a year earlier, according to the Ministry of Commerce
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China will continue to implement a prudent monetary policy as inflationary pressures still remained high, said a statement on the website of the central bank on Monday.

The Consumer Price Index (CPI), a main gauge of inflation, rose by 5.5 percent in May from the previous year, setting a 34-month high and well above the government's target ceiling of 4 percent for the year.

The country's top economic planner said recently that overall price levels will be higher in June than May.

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The interest-rate hike will help check high inflation and the June CPI data will be 6.2 percent, Lu Zhengwei, chief economist for the Industrial Bank, predicted.

Xu Xiaonian, an economics professor at China-Europe International Business School, wrote in his microblog that the scale is small and even with a 250-basis-points hike, the real interest rate would still be negative.

The real interest rate is the nominal interest rate minus the inflation rate.

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After this hike, further such moves will not be likely within this year and the need to again raise bank's reserve requirement ratio will also be low, said Zhu Jianfang, chief economist with CITIC Securities.

But Li Xunlei, an analyst at Guotai Junan Securities in Shanghai, forecast there will be another interest-rate hike in the third quarter.

Guo Tianyong, a professor with the Central China Finance University, said the move is necessary as it can help correct the negative interest rates and manage inflation, but it can also slow economic growth and precipitate inflows of speculative hot money.

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The interest-rate hike is not good news for local governments, as they will have to pay higher interest on their debts.

Local government debt totaled 10.72 trillion yuan (1.66 trillion U.S. dollars) at the end of 2010, said an audit report late June.

It's high time to test the local governments (to deal with the debts) as risks of local government debt defaults are increasing, said Xie Guozhong, an independent economist in China.
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China's fiscal revenue growth is expected to slow down in the later period of the year, Finance Minister Xie Xuren has said.

Policies such as higher exemption threshold for individual income tax and tax breaks for small-sized firms with thin profits will reduce fiscal revenue, according to a statement posted on the ministry's website on Saturday, citing Xie's address at a meeting held on Friday.

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Fiscal revenue rose fast in the first half of the year as the country's economy was running generally well toward the direction of macro controls, he said.

Government data showed fiscal revenue rose 34 percent year-on-year in May, faster than 27.2 percent in April and 26.7 percent in March.

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However, the economic development faced complicated situation both at home and abroad, with many unstable and uncertain factors, he added.

Also at the meeting, he asked local authorities to take water projects as a major sector for fiscal expenditure and increase investment.

He called for government spending to take the leading role and encouraged social capital into the sector to ensure that annual investment in water projects double the level for 2010 in the following 10 years.

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Further, he said low-income housing, education and social securities should be the priorities for fiscal spending in 2012.

Governments should strictly control expenditure on vehicle purchases and maintenance, overseas trips and official receptions, he said, asking authorities to publicize budgets to improve transparency.

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The Republic of South Sudan declared independence Saturday and China immediately established diplomatic ties with the world's newest country.

China, as a responsible big country and a friend of both north and south Sudan, has played a unique and constructive role in pushing forward their peace and development for many years.

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China was a witness to the forming of the Comprehensive Peace Agreement between north and south Sudan. During a long period, China, along with the rest of the international community, has respected the will and choice of the people of both sides, and made arduous efforts in helping them realize peace and turn away from war.

China has actively participated in U.N. peace-keeping missions in Sudan, and it sent a team to observe the referendum on south Sudan's destiny in January at the invitation of both sides.

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In May, after armed conflicts broke out between north and south Sudan, China worked hard to help end the conflicts.

Chinese Special Envoy on African Affairs Liu Guijin visited Sudan in June to persuade both sides to prevent further clashes.

The fundamental reason behind China's effective work is China has kept an impartial attitude in dealing with both sides and maintained a focus on their long-term interests and regional peace and stability.

As Liu said during his visit, "China is ready to exert joint efforts with Sudan to find solutions to the outstanding issues for sustainable peace in Sudan and for creating stability in the region in the long run."

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For many years, China has provided aid within its capacity for north and south Sudan for their economic and social development, and established a good model of South-South cooperation.

China has helped Sudan build a complete oil industry in 16 years, trained many workers, offered humanitarian assistance to north and south Sudan, established hospitals and schools, and dug wells to help locals improve their living standards.

In comparison with Western countries' aid, China's assistance to north and south Sudan, although limited, is sincere and comes without preconditions, something that is appreciated by the people of both sides.

The China-Sudan friendship, which has been tested over more than half a century, will surely be carried forward in the future.

Sudanese President Omar al-Bashir said his government would enhance the friendly relations with China after south Sudan became independent.

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President of South Sudan Salva Kiir also says his government and people consider China a sincere friend and reliable partner. He said South Sudan was willing to further relations with China after it declared independence and welcomed investment from Chinese enterprises.

Meanwhile, as Sudan and South Sudan both face severe challenges after the latter became independent, their development relies on the support from the international community.

Sudan's economic development model badly needs transformation after the oil-rich southern part was separated from the country. South Sudan's development lags behind its northern neighbor with underdeveloped infrastructure and an inexperienced new government.

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China has maintained good relations with both parties and has been participating in Sudan's construction in energy, agriculture and infrastructure.

In the future, China will play a particular role in enhancing the communication and cooperation between Sudan and South Sudan and the economic construction of the two countries.

"After South Sudan declared independence, China will continue to develop the friendly, cooperative and win-win relations with north and south Sudan. China will work with the rest of the international community to actively participate in the reconstruction of South Sudan," Liu told Xinhua on June 22 after his visit.

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Lisa Grande, U.N. humanitarian chief in South Sudan, said China had advantages in the construction of infrastructure such as roads, bridges and the power grid in Sudan and South Sudan. China, through its projects, could communicate with the two peoples and facilitate the mutual trust and cooperation between the two parties, she said.

However, some Western countries have accused China of using its relations with the two countries for "plundering energy resources."

Such criticism will not impede China's determination and efforts to help people from Sudan and South Sudan realize their countries' peace and development

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Wall Street stocks suffered its worst day in two months Wednesday, hit by weak earnings, lackluster economic data and the lingering political stalemate in Washington talks as the deadline for a U.S. default looms.

The Dow Jones industrial average lost 198.75 points, or 1.59 percent, at 12,302.55. The Standard & Poor's 500 Index was down 27.05 points, or 2.03 percent, at 1,304.89, and had its worst daily percentage decline since June 1. The Nasdaq Composite Index was down 75.17 points, or 2.65 percent, at 2,764.79.

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The debt ceiling debate has grabbed much of investors' attention this week as the August 2 deadline approaches, but it took a back seat for much of the day as the market reacted to earnings disappointments in industrial and technology sectors.

A late statement from White House that the government would be "running on fumes" if the debt ceiling isn't increased by the deadline added to selling.Besides a potential default on U.S. debt, the government could face a downgrade of its credit. The S&P 500 index has lost 3 percent this week amid acrimonious debate about raising the American debt ceiling.

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"The market is beginning to show real concerns in terms of a default. I don't think it's going to happen ... but are we headed for a downgrade? That is becoming more of a possibility as each day goes by," said Peter Cardillo, chief market economist at Avalon Partners, in New York.

Volume increased as the selling extended, a sign of weak conviction among investors. Nearly 14 stocks fell for every one that rose on the NYSE.

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Mexican President Felipe Calderon (L) and his Guatemalan counterpart Alvaro Colom arrive at a joint press conference at the official residence Los Pinos, in Mexico City, capital of Mexico, on July 27, 2011. (Xinhua/David de la Paz)

Mexico and Guatemala agreed to strengthen security along their border to jointly fight organized crime.

The Guatemala-Mexico border runs between northwestern Guatemala and southeastern Mexico, across which commerce between the two countries as well as the rest of Central America takes place.

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Human and drug trafficking as well as illegal immigration between the two countries are rampant due to lax security and geographical conditions along the border.

At a meeting held Wednesday at the presidential palace Los Pinos in Mexico City, Mexican President Felipe Calderon and visiting Guatemalan President Alvaro Colom agreed that the Guatemala-Mexico border should offer safe commercial opportunities to Central America.

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Calderon said his country's bilateral relationship with Guatemala is essential for security in Mexico.

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"We have to strengthen cooperation to improve security on the border, especially for all the Guatemalans and Mexicans who travel along the large common border," Calderon said.

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Colom stressed the significance of the two countries' strong collaboration regarding "immigrants, security and justice."

"The unequal fight against organized crime is moving forward," Colom said, adding that it would be less unequal if Mexico, Guatemala and Central America are united.

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Mexican President Felipe Calderon (C) shakes hands with his Guatemalan counterpart Alvaro Colom (L) during the welcoming ceremony at the official residence Los Pinos, in Mexico City, capital of Mexico, on July 27, 2011. (Xinhua/David de la Paz)

Colom left for Mexico Wednesday to discuss migration, security and trade with Calderon and will end his visit later on Thursday after meeting with Mexico City Mayor Marcelo Ebrard.

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The Chinese flag on an electronic screen at the Nasdaq on May 11, 2011, in New York, the day when Jiayuan.com, China's largest dating website, was listed. Provided to China Daily

Chinese companies listing overseas are expected to seek to improve their image to shake off the credibility crisis they face in the United States stock market, say analysts.

Three Chinese companies, Longtop Financial Technologies Ltd, ShengdaTech, and China MediaExpress, have been delisted from the Nasdaq in the United States for accounting irregularities.

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The price of other Chinese companies' stocks on the Nasdaq and the New York Stock Exchange plummeted as a result of the credibility crisis. Some stock owners even swore off from ever buying Chinese stocks again on stock-related websites. Credit-ratings firm Moody's Investors Service also warned of "red flags" at 61 rated Chinese companies, further affecting the price of Chinese equities.

Some US-listed Chinese companies expressed confidence with their company's future stock performance and believed that the recent panic by share owners is only temporary.

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"The recent credibility crisis for some Chinese companies is part of a near-term market fluctuation and will have little bearning on our company's fundamental business and long-term trajectory and performance," said Catherine Zhang, chief financial officer (CFO) of AutoNavi Holdings Ltd, a leading provider of digital map content and navigation and "location-based solutions in China".

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Qihoo 360 Technology Co Ltd, a company that provides free and comprehensive Internet and mobile security products, remains optimistic as well. Qihoo's CFO, Alex Xu, said: "Investors will increasingly trust our stock performance if they notice our steady path of development." Xu believes that Qihoo's business model is unprecedented in either the US or China. "While it takes some time to explain our unique model, American investors are especially drawn to the model's creativity," Xu said.

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Zhang said: "The US equity capital markets maintain high listing standards for all companies that list on their exchanges through the IPO process, and Chinese companies are no exception. Even beyond listing requirements, we've always believed that it's important for companies to be transparent and to demonstrate high standards of corproate governance. The US capital market system is relatively rational and ultimately rewards companies that demonstrate solid performance in the long run."

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Zhang believed that in some ways the rash of recent scandals has helped weed out many fraudulent Chinese companies and will ultimately benefit those in high growth industries and maintain proprietary technological advantages over competitors.

"Unlike some of the exposed companies that used backdoor listings, AutoNavi underwent strict and legitimate due diligence by top-tier investment banks, lawyers and auditors prior to its initial public offering," she said, adding that she stood by the quality of AutoNavi's internal control processes and its employees' ethical standards.

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Similarly, Xu said that although Qihoo cannot control external factors that influence the company's stock price, such as some investors' impressions of Chinese companies in general or China's alleged lack of protection for intellectual property, "we do our best to implement marketing strategies and reach our company's goals".

"To us, the effect of ratings from Moody's is rather insignificant," Xu told China Daily.

Xu said that unlike some other HK/US- listed Chinese companies, Internet companies such as Qihoo and Sina do not finance through the bond market and are not subject to recent warnings by Moody's of "red flags".

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Xu acknowledged that Moody's ratings reflect the general suspicion of Chinese companies. "A Moody's red flag is yet another reminder of Chinese companies' lack of corporate governance," Xu said.

AutoNavi and Qihoo both chose to list on the US stock market because they saw a better investment environment. "By listing in the US, we can offer our employees an ownership stake through company stock, allowing them to benefit from being a shareholder through stock option programs. This is a benefit that is much easier to implement as a US-listed company as compared to a company listed in China," Zhang said.

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Xu added that Qihoo hopes to gain access to better acquisition financing by listing in the US. Both AutoNavi and Qihoo are expecting to reach out to global investors by listing in the US. While listing in China would receive mostly domestic attention, listing in the US serves as an international branding event for a company. The day Qihoo listed on the New York Stock Exchange attracted much international attention and Qihoo's stock price rose 135 percent.

A survey designed by China Economic Review magazine and Ipsos Marketing indicated that ordinary US investors in Chinese stocks made a net profit trading Chinese shares over the 12 months ending on May 1 this year. The survey further showed that retail investors are also more bullish on China shares than they were last year.

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The mechanism protects newly listed companies from stock rushes. "Hedge funds are more sophisticated and they understand the potential of listed companies. Retail investors, regardless of their nationality, do not have a hedge fund's capacities to build reliable financial models and estimate a company's market potential or future stock performance," according to the securities analyst who declined to be named.

The survey also indicated that the most active investment sectors are electronics and technology, telecommunications and the Internet. This trend will most likely continue as both AutoNavi's navigation application and Qihoo's mobile phone security software become increasingly popular among smart phone users, observers said.

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"Currently, more than half of the existing 800 million smart phones use our 360 mobile phone security software," Xu said. "Because most Nokia smart phone users will start switching to Android and Apple smart phones in the near future, we hope to use this transition period to further develop and promote our smart phone software."

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