China's Plunging Markets: Retail Investors Stunned by Rout – NBC …
An investor sits in front of a chart showing China’s Shenzhen stock market index on Monday. David Lom
On Monday, the People’s Daily — essentially the Communist Party’s mouthpiece — declared that “rainbows always appear after the rains” in an attempt to reassure investors.
These words did not halt the overall decline, however, and on Tuesday Chinese stocks fell again, with the CSI300 index of the largest listed companies in Shanghai and Shenzhen ending down 1.8 percent. The Shanghai Composite Index fell 1.3 percent.
Dissatisfaction with the government attempts to stabilize the markets is palpable among retail investors on the trading floors.
“The government support measures are mostly useless,” said Yan, a retired public servant.
Regardless of what measures Beijing takes to help boost investors, experts say it was only a matter of time before the party ended.
“China’s stock market is like a big casino and the Chinese love gambling,” said Hu Xingdou, professor of economics at the Beijing Institute of Technology. “The stock market valuation is out of line with the economic fundamentals, and this is due to speculation and government policy interventions.”
“The market could bounce back, but over the long term, I am not optimistic because China’s economic situation isn’t good, and the more the government intervenes, the bigger the market bubble becomes,” he added.
The current bloodletting would give way to a healthier market, countered Peter Alexander, managing director at China-based investment consulting firm of Z-Ben Advisors.
“I am not sure when it will bottom out, but I feel extremely confident in the long-term trajectory of the Chinese equities market,” he said.
Until the markets stabilize, it will be the little guys who will continue get hit the hardest.
One investor said he’d seen his holding in Harbin Gong Da High-Tech Enterprise Development Co., a food-processing conglomerate, shrink by almost 10 percent on Monday alone.
“I bought in at 16.99 yuan, it went down to 13.88 and finally closed at 15.20,” said Ma, a retired supermarket employee.
Despite his losses, Ma held out hope that better days were ahead: “To lose hope is useless, we have no choice but remain optimistic.”
More:
China's Plunging Markets: Retail Investors Stunned by Rout – NBC …
