The Chinese stock market is sometimes likened to an over-grown teenager behaving in ways that often confound analysts and frustrate investors.

The erratic movements in the share prices of some Chinese enterprises, mostly in the aviation, hotel, catering and agriculture sectors, in Hong Kong and Shanghai were widely seen to be an exaggerated response to the latest bird flu scare. Some analysts have attributed such irrationality to market immaturity, predicting that prices will quickly stabilize when investors regain their senses.

What investors' jumpiness has shown up are some real and tangible worries that have been weighing in the minds of many in the past couple of months. First among those is, of course, the macroeconomic trend that is pointing to more sustainable but slower growth in the coming years, in contrast to the unbridled economic expansion of the past. To keep the economy on a steady course, the government is embarking on a bolder phase of reform with sharper focus on the opening of the financial market and protection of the environment.

A program of such grand scale is expected to create fundamental shifts in the business environment, generating new opportunities to those State-owned and private sector enterprises that are flexible enough to adapt, while cutting the lifeline to those that are too clumsy to change. Under such circumstances, some of the reigning stock market stars of today will become the duds of tomorrow while some of the largely ignored gems will one day emerge as the bluest of the blue chips.

Indeed, the stock market bull that showed its face briefly late last year and early this year has largely gone into hiding while analysts and investors are trying to figure out who are hot and who are not under a new economic regime. The dip caused by concern about the H7N9 bird flu was merely an added layer of haze.

It really looks like it's winter in the stock market. The benchmark index surged from a low at around 2047 in September 2012 to peak at 2478 in March, despite occasional faltering. Since then, the index has led back to below the 2300 level while the many overseas markets are scaling new heights.

But not everyone is hung up in uncertainties. Some analysts are recommending stocks in the petrochemical, electricity, commerce and food processing sectors, contending that they stand the best chance of benefiting from the economic shift from external trade to domestic demand. They are also advising investors to avoid, at least temporarily, banks and property companies because they are the most exposed to the uncertainties of the economic adjustment policies.

Such policies should present exceptional opportunities for investors who are confident about their capabilities to look into those sectors that other investors are shying away from. Take the banking sector. To be sure, financial reform, especially the liberalization of interest rates, could result in the narrowing of spreads from which most banks derived the bulk of their earnings. But some banks are better positioned than others in restructuring their asset bases to take advantage of the progressive opening of the capital markets and the internalization of the renminbi.

Many investors have been blaming the government and everyone else rather than themselves for their stock market losses. These investors should never have gone into the stock market in the first place. They can do themselves a favor by just keeping their savings in banks.

The faster pace of change in the economic landscape in coming years will make it even harder for the average investors who are used to buying and selling on rumors and hearsay to make money in the stock market. Greater transparency resulting from market reform can help ensure that share prices are influenced more by corporate performance and economic fundamentals than investors' herd instinct. That's maturity.

The author is a current affairs commentator.

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