Others News
- Regulators teach investors basic financial knowledge
Date: 6-Nov-2007 Sources: (Shenzhen Daily)
XI ZHONG learned the hard way about the risks of investing in the stock market.
The 40-year-old day trader and tech-sector dropout says his training over the past 12 years has consisted of losing bets time and again, then learning from his mistakes.
'I' ve already gained so much experience through losing money that if I gave it up now I' d be throwing it away - look at how much tuition I' ve paid,'Xi said in the VIP room of a Beijing brokerage after the market close, three screens in front of him.
Still, Xi laments that even today, so many new investors have to go through the school of hard knocks like he did.
'There are so many people who have just entered the stock market who have no idea about the risks involved,'he said.
'Many of them invest the savings they' ve earned from working hard for decades. Some of them are retired and invest their pension money. Sometimes I don' t even have the heart to watch.'
Xi is not alone in worrying about the lack of understanding of financial basics among many of China' s new investors, millions of whom have poured into the market as the country' s main share index has risen fivefold since the start of last year.
Though figures are hard to come by, domestic media and fund managers say retail investors accounted for the bulk of the turnover before a sharp but brief dip in the market in May.
Concerned about potential financial and social turmoil should the market suffer a big correction, the securities watchdog has sharply stepped up its warnings about market risks, saying that educating investors is one of its immediate priorities.
'Investor education is a very vital task over the long term and an indispensable part of the development of market infrastructure,'Tu Guangshao, vice chairman of the China Securities Regulatory Commission, said.
In 2001, at the end of the last big bull run, prominent economist Wu Jinglian said the stock markets were like a casino, causing a stir in the securities industry.
Back at Xi' s brokerage, all signs indicate that regulators still face an uphill battle.
While the application materials for opening an account start off with a risk disclaimer, the pamphlet' s design speaks volumes about investors' mood: a red silhouette of a bull' s head takes up about three-fourths of the cover, while a tiny black bear makes its exit off the lower right-hand corner of the page.
Zhu Qiuxia, for one, is not worried about a bubble. The power grid worker has put all her savings into shares, and is planning to keep them there until the Olympic Games next year, when she plans to put her original principal back in the bank and continue to speculate with the profit she' s made.
'I' m pretty confident in myself,'she said, flipping through a well-worn notebook filled with newspaper clippings and notes.
'Before the Olympics are over next year, just like before the return of Hong Kong, as long as it hasn' t happened yet, the market won' t collapse. That' s the main policy.'
Zhu' s attitude is common among retail investors - that because the government will come to the rescue should the market suffer any major volatility before the Olympics next August.
William Hess, Greater China manager for Global Insight in Beijing, said that retail investors were essentially replicating the type of 'blind investment?that many Chinese companies have been known for in the past.
'But the downside risks for the retail investors are certainly much larger, when they' re buying into funds and buying shares when their only knowledge of the stock market is that it seems to continue to go up,'Hess said.
'That kind of perspective towards risk and the expectation either that risk is low or that someone will bail them out leads to, call it 'irrational exuberance' , on the part of Chinese investors in the same way we' ve seen in other bubbles.'
Sponsor Results:
