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Investors numbed by shock and confusion

By Wang Lan and Zhou Yan (China Daily)
Updated: 2008-06-11 10:40

For 60-year-old Yu Aimin, a retiree in Beijing, yesterday's 7 percent plunge in share prices was more than a paper loss of over 20,000 yuan. It was, in her words, a betrayal.

"The strong market rally after the government cut stamp duty (in April) had filled our hearts with hope, and everybody has been talking about a new bull run," she said. "Look what happened."

Like many other stock investors, Yu is confused and hurt. "What's going on?" she said.

Yuan Jie, a 45-year-old worker in a Beijing chemical factory, has been asking the same question. "I thought the bull had returned when shares soared more than 9 percent after the stamp duty cut," said Yuan. "I didn't realize how foolish I was until today."

Many analysts have attributed the latest bloodbath in the stock market to the increasingly gloomy outlook of the global economy dragged down by a sinking US dollar and rising oil prices. Investor concerns about a US-led global economic downturn has already sent many stock markets around the world on a tailspin.

But Chinese investors are confused because they simply can't see the link between the global trend and the domestic stock market, which is largely closed to foreign investments.

"I can't see any substantial relation between Chinese stocks and the global markets," said Zhang Xiangfeng, a 53-year-old retiree who has invested nearly all his savings in stocks.

"Chinese stocks are traded in yuan and US stocks in US dollar," he said. "They don't mix."

Some local investors blame the latest government credit tightening measures for the market reverses.

"We didn't expect the 1 percentage point hike in reserve requirement ratio to deal such a serious blow to investor confidence," said Li Jianfen, a 50-year-old investor in Beijing. "But it did."

She said it was not the first time she felt helpless in a market crash. "But yesterday was the first time I felt really down. I am going to clear all my positions once the market recovers a bit."

Her feeling was echoed in the crowded public gallery at a Shanghai brokerage house.

"I was totally shocked," said 36-year-old salesman Wang Xuyan. Although he said he and many other investors have got used to sharp swings in the market, "I can't remember any other time I felt worse than now."

Also engaged in stock gazing in the same hall, Fan Xiaoyan, a 45-year-old cashier, said: "I'm so disappointed, and have no more expectations from stocks. The bear market is definitely here. "

"It's not the first time I got hit," said Lin Hua, a 30-year-old woman who works in an IT company. "I have totally given up, but will hold my stocks and wait longer, several years maybe, until I really need the cash."