Beijing Baofeng Technology - a Chinese tech company that specializes in making virtual reality headsets - has surged into the headlines thanks to a one-month share price chart that looks like a stairway to ... share price heaven?

Beijing Baofeng stock price - Bloomberg
The firm went public in March and its shares have increased by their allowable daily limit ever since. The rapid rise means that a company that priced at a market value of 856 million yuan just six weeks ago is now worth a startling 3.7 billion yuan. While Baofeng's meteoric gain makes it the best-performing stock in China this year, it's not alone in enjoying a considerable run. The Financial Times reports that every one of the 29 IPOs that took place in Shanghai and Shenzhen last month have risen by the daily limit each day since. Meanwhile, the Shanghai Composite Index is up a delirious 39 percent so far this year, while the CSI 300 Index has gained 35 percent. For many Chinese investors, that is some tantalizing price action.
Openings of Chinese brokerage accounts have surged in recent months as has the take-up of margin accounts which offer investors the ability to borrow against their stock portfolios.
The below charts from Macquarie analysts Matthew Smith, Steve Zeng and Patrick Dai, illustrate the trend:
Margin lending and account openings - Macquarie
How high could the whole thing go, you ask? The Macquarie analysts estimate that, at an extreme, investors could borrow RMB 85.7 for every RMB 100 of collateral in their portfolios. That suggests the theoretical ability to increase margin finance loans from the current 1.7 trillion yuan to as much as 9.4 trillion yuan, or 461 percent higher than the current level. While it's doubtful that would ever happen (banks, after all, do not have unlimited lending capacity and the government has already instituted some curbs on margin lending) even a moderate increase in margin borrowings could be meaningful. At 3.2 percent of total market cap, China's margin debt has already eclipsed bubble-era Japan as well as pre-Asian Financial Crisis Korea.
Margin debt as percent of total market value - Macquarie