We Talked to Chinese Stock Investors. They Say They’re Still Optimistic
Shareholders tell FP recent drops have shaken them, but they remain bullish on their country's future.
China’s stock market has been on a roller-coaster ride of late, dropping 30 percent over three weeks in June and July before surging a combined 13 percent over July 9, 10, and 13. Much ink has been spilled about the implications for China’s economy and for world markets, but less is known about what individual investors are thinking and feeling. Do they think their government has done enough (or too much) to arrest the fall? Are they optimistic for the market’s future? Who do they blame for what's transpired?
China’s stock market has been on a roller-coaster ride of late, dropping 30 percent over three weeks in June and July before surging a combined 13 percent over July 9, 10, and 13. Much ink has been spilled about the implications for China’s economy and for world markets, but less is known about what individual investors are thinking and feeling. Do they think their government has done enough (or too much) to arrest the fall? Are they optimistic for the market’s future? Who do they blame for what’s transpired?
Foreign Policy reached out to solicit opinions from eight Chinese citizens, all of whom are currently active in the country’s stock market. All declined to share their names because they were speaking on what has become a sensitive policy issue. One began trading as early as the 1990s; others have entered the markets in just the past six months. They come from the port city of Xiamen, the southern city of Shenzhen, and the capital, Beijing, and they work in government and in the private sector. Their ages range between their mid-20s and their mid-50s. Virtually all of them use apps on their smartphones to execute trades. Some were drawn in by the recent bull run; others were influenced by chatter from colleagues, classmates, and friends to start trading. (Paradoxically, one started trading to make money to help parents after they lost money in the stock market.)
Respondents told FP they were upset by the recent market fall; they differ on whether their government has done a good job managing the crisis, and on what should be done next. But all eight said they were unanimously optimistic for the market’s long-term prospects. FP shares their answers, translated into English and edited for clarity, below.
FP: What are your feelings towards the stock market’s performance in recent weeks?
“I think it’s a disaster.”
“For a new investor like me, I try to grow my knowledge and watch things calmly. I don’t have a lot invested anyway.”
“I think the Chinese stock market is being controlled by outside forces, because the volatility is abnormal.”
“Big ups and downs.”
“Everyone can see from recent events that you can’t blindly follow the winds of the markets. As soon as you’re careless, there are ten thousand abysses behind you.”
“It’s an abnormal slump.”
“What goes up must come down; it’s a normal phenomenon.”
FP: Do you think measures from regulatory authorities over the past weeks have been satisfactory?
“It’s not bad, but I wouldn’t say I’m satisfied. It’s depended on administrative measures and not on market adjustment.”
“I’m very unsatisfied. Regulation lacked force.”
“I’m not satisfied. A lot of measures coming out have not made the situation better. They haven’t been persuasive enough.”
“It’s okay. They are encouraging healthy market development.”
“It’s too little, too late.”
“I don’t understand the situation, so I can’t say.”
FP: Are you optimistic for the stock market in the short term? The long term?
“I’m not optimistic in the short term; in the long term, I have hope.”
“I’m not optimistic in the short term. Looking at the long-term, I hope the Chinese stock market can effectively get rid of this bubble and make the market more mature.”
“I’m optimistic in the short and long term.”
“I’m optimistic for the future of the market, but I will be careful in the short term.”
“In the short term I’m not optimistic, but in the long term I’m still optimistic.”
“I love my country, love the party, love Papa Xi [an affectionate moniker for President Xi Jinping], and love Housekeeper Li [a nickname for Premier Li Keqiang, meaning he is Xi’s assistant].”
FP: What do you think is the reason for the recent market drop?
“Selloffs by big shareholders led to panic among retail investors, which caused the drop.”
“There was too much outside capital in the securities markets, too much leverage, brokers were too greedy, regulators too indulgent.”
“It’s not clear. I don’t worry about it, I’m just a little, little investor.”
“The effects of foreign capital, and manipulation.”
“China’s securities regulation has defects.”
“Margins and financial leverage suddenly attacked, foreign capital sold the Chinese market short; the CSRC over-issued new stocks.”
“From the abnormal rise to the abnormal fall, China’s stock markets still haven’t reached a healthy stage of development.”
“There are ups and there are downs.”
FP: What, if anything, do you think will stop the drop? Is there anything the government should do?
“Severely striking illegal market-manipulating conduct, including via criminal investigation.”
“It’s not clear.”
“The government needs to deploy enough money to remove the poisonous capital and leverage [in the system] before it can save the market. “
“If the government is to support the stable development of the market, SOEs and large investors can’t reduce their holdings, but must increase them. Only when the recovery small and medium company stocks recover [in addition to blue-chip companies and SOEs] can the overall market come back.”
“I haven’t thought about this deeply. But you can’t do nothing about it.”
“You can’t forcibly stop a fall; the market rises and falls according to its own rules.”
David Wertime is a senior editor at Foreign Policy, where he manages its China section, Tea Leaf Nation. In 2011, he co-founded Tea Leaf Nation as a private company translating and analyzing Chinese social media, which the FP Group acquired in September 2013. David has since created two new miniseries and launched FP’s Chinese-language service. His culture-bridging work has been profiled in books including The Athena Doctrine and Digital Cosmopolitans and magazines including Psychology Today. David frequently discusses China on television and radio and has testified before the U.S.-China Economic and Security Review Commission. In his spare time, David is an avid marathon runner, a kitchen volunteer at So Others Might Eat, and an expert mentor at 1776, a Washington, D.C.-based incubator and seed fund. Originally from Jenkintown, Pennsylvania, David is a proud returned Peace Corps volunteer. He holds an English degree from Yale University and a law degree from Harvard University. Twitter: @dwertime
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