From boom to bust, China's stocks casino loses luster
BEIJING (Reuters) - China's middle-class moms and blue-collar pensioners were among the world's most avid and successful investors last year. Now their record is one of lost fortunes, broken families and protest.
China's stock market is down nearly two-thirds in eleven months and the anger of millions of ordinary citizens has unnerved the country's stability-obsessed government.
Beijing launched an unprecedented rescue package that drove up most stocks the maximum permitted 10 percent on Friday.
Yet amateur investors have been badly burnt and may think twice before venturing back into the casino-like market.
"It's good the government has come in to rescue the market, but I'm afraid that we haven't hit rock bottom yet," said Zhan Ye, a driver for a property company who used to order stock trades from his car as he listened to the radio news.
"As soon as people see prices falling, they'll just get scared and pull their money out again," he said.
China's once raucous brokerages have turned into grim social clubs for investors tallying their losses.
A group of four ladies sat around a small table and played cards in a CITIC Securities office in Beijing last week. Sipping tea, they glanced only occasionally at the share prices lines streaking downwards on the computer screens around them.
One man paced up and down the aisle in tattered leather sandals, pausing only to sift through his handful of walnuts.
Even by the standards of the financial turmoil rocking the world, China's stock market plunge has been violent.
Millions of people with little money to spare and little knowledge of investing piled into the market as it more than tripled in value in less than two years. Since peaking last October, shares are now back to their level in late 2006.
"Middle-class dreams have been buried. Life savings have vanished just like smoke," said Zhang Qi, an analyst at Haitong Securities in Shanghai. "Looking ahead, more family investors will stay far away from the stock market."
Nevertheless, Zhang said Beijing's rescue package, including a pledge to use government money to buy listed shares, was the boldest in the 18-year history of the stock market and could push shares up for weeks.
Zhou Yu, 25, a Shanghai office worker, was less sure. He cashed his stocks in earlier this year, picking up a laptop, an iPhone and a camera with his profits.
"I'm not planning to go back in right now," he said. "With the overseas market conditions and economic uncertainty, who knows what the next big trouble will be?" Continued...
