Chinese markets have had a bumpy start to the new year. Buffeted by the falling yuan and two days of stock exchange suspensions at the start of the month, the fluctuations have left the country’s legions of retail investors on edge.
Unlike many western markets, where institutional investors like insurance and pension funds dominate, 80 percent of transactions in China’s markets are made by small investors.
Many of them are retirees like He Meizhen, a 76-year-old grandmother who got into trading 18 years ago to make some money after she retired from her job selling stationary.
She spends almost every day glued to a computer screen at the Oriental Securities Exchange along with a group of fellow retirees. Watching the ups and downs of the market is punctuated by exercises around the building and the occasional snooze.
By no means an expert in the ways of business and finance, He says she gets her investing advice mainly from her fellow geriatric investors in the brokerage.
But, once a firm believer that trading stocks would boost her income, recent fluctuations have left her in doubt.
“Our stocks haven’t properly gone up. They’ve always just been sucking up our money and each time they fall, they fall even more. They never really go up but they definitely fall a lot. I don’t really know how it works. Now that it’s already like this it’s impossible to get out, it’s increasingly not worth leaving (the market). My attitude is not balanced, when they’re high I don’t sell them, when they’re low, how can I sell them? If they’re trapped I just leave them there trapped. (For now I’m) holding them,” she said.
He Meizhen has even resorted to taking money given to her by her children for living expenses and investing it in the market without their knowledge in the hope that one big gain might reverse her fortunes.
The fact that China’s market is dominated by investors like He adds to its volatility, experts have noted, as rumours of imminent fluctuations can trigger a herd-like mentality amongst investors who are less interested in the fundamentals of the firms they are trading in.
Having lost 40 percent in the ups and downs over the past year, He says she is now looking for a permanent way out of the market.
“I don’t want to do it (continue investing), later on I will see the what the situation is, if the stock market improves and goes up then that’s just a short term improvement. I don’t want to make a long term investment, and stubbornly just leave my money there. I don’t want to do it, (it) scares me to death,” she said.
With confidence amongst the likes of He at a low, Beijing has an additional challenge in seeking to return the market to health, as any major rally comes with the risk of triggering a mass exodus of investors seeking to pocket any gains. (Reuters)
