“I’ve never seen anyone so pessimistic,” said Wu Ming, a hairstylist in Beijing. He trades Chinese stocks on his cell phone when the salon’s traffic is slow.
“When I fell last time, [in the market], there was always talk of buying a push. “No one dares to say anything like that this time to avoid looking stupid,” he said. Barons.
Wu’s pessimism also applies to the Chinese and Hong Kong stock markets, which have collectively wiped out nearly $6 trillion since their most recent peak three years ago.
Government attempts to halt the decline, including recent efforts to limit short selling, have had little effect. But the gloom reflects a broader sentiment across China, from people investing in housing and employment, to small businesses and new graduates. Domestic sentiment among investors, foreign companies and consumers has been battered by decades of rapid growth.
Compared to Western countries where professional institutional investors dominate, a large proportion of Chinese citizens invest directly in the stock market, creating opportunities for the average citizen with little knowledge of market vagaries to invest directly. The number is increasing.
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“Retail investors form the backbone of trading in China’s domestic A-share market, so the dismal performance of the past two years has likely pushed trading volumes to very low levels,” the Hong Kong-based company said. Director Doug Young said. Bamboo Works analyzes listed companies in China. “A-shares” refer to Chinese companies traded on the mainland stock exchanges in Shanghai or Shenzhen.
Of course, the market decline has to do with the overall economic decline and lack of recovery since the pandemic. This, in turn, is coupled with the catastrophic decline of the long-troubled real estate sector, which accounts for at least a quarter of China’s economy and is where the average Chinese primarily invests their savings.
“We’re probably seeing a lot of retail investors everywhere put their dwindling savings in bank accounts. Given the terrible real estate market, there are other places to put your money at the moment. Because there really isn’t a safe place to invest,” Young said. Barons Hong Kong was the world’s worst-performing major market last year.
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Kane Hu, chief analyst at Peak Investment, a specialized stock brokerage firm in the western metropolis of Chengdu, said there is currently a vicious cycle in which the economic downturn fuels pessimism and vice versa, exacerbating the market decline. said.
“When a large portion of people’s salaries go toward mortgages, and when real estate values plummet while loan interest rates remain the same, people tend to be conservative with money,” Hu said.
As China’s youth unemployment rate exceeded 20% in July, the Chinese government stopped publishing the index altogether.multiple experts spoke Barons They believe the actual figure is more than double the official rate. In the past year, Barons spoke to more than a dozen unemployed young people, all of whom had degrees from prestigious or Western universities.
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“Our unemployed children are going bankrupt,” Hu said. “Mom and Dad’s basement is full of unemployed adult children.”
Day trader Wu’s claims that his optimism has drawn ridicule online appear to be spot on. On one of the most popular stock trading forums on the social media site Douban, one user tried to turn the downturn into an opportunity. “The entire market lacks confidence,” the post reads. “But if you have a long-term vision, you can end up with a big income. Remember that the best buying opportunities are when the market is falling, not when it is rising. Please do not forget.”
The incident was immediately condemned by commenters, many of whom said the market had been exposed. “This argument could be made anywhere but China,” one response read. “Every time I see an article like this, I think it’s hard to say the end is near,” read another.
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Chinese banks are not offering much interest these days as the Chinese government continues to lower interest rates. “But most people believe that at least Chinese banks won’t fail, because the government is always ready to bail them out if they run into trouble,” Young said.
That’s little consolation for citizens like Chengdu car salesman Zhong Weiyi, 58. Barons In October, he talked about the decline in the value of his home. He doesn’t have much money in stocks, but he hasn’t seen the bottom yet, so he’s withdrawing what he has.
“Everyone who said things would get better was wrong,” he said.
Please contact editors@barrons.com