Four reasons to worry about stocks

Chinese A-share markets outperformed other global exchanges last year, with the Shanghai Composite Index rising 52.87 percent in 2014. After many years of being among the world's worst performing exchanges, Chinese investors have plenty of reasons to cheer the recent rebound.

But with markets still frothy, there are four major risks behind the run-up that deserve notice.

First, the gains look unsustainable. The Shanghai benchmark added some 1,118 points last year, most of which were tacked on from December.

Second, as many others have noted, rising equity prices appear increasingly detached from economic fundamentals. To mention just the latest sign of weakness, China's official purchasing managers' index eased to a reading of 50.1 for December, down from 50.3 in November and just shy of contraction territory.

Third, blue-chip stocks in pillar sectors have been the biggest winners in the current bull market, while investors in small-cap companies have largely been left behind. Such an imbalance is unhealthy and not conducive to long-term development.

Fourth, the booming A-share market will encourage more companies to go public. As IPOs come flooding in, liquidity conditions could become strained.