Chinese Savers Shaken By Stock Market

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With 80% of China’s households investing their savings in the stock market, many have been hit by the recent volatility.

The dust and the daily bustle of Beijing’s old back streets feels a long way, in every sense, from the trading floors of Europe and the United States.

But it’s a good place to come to start to understand China’s stock market, and the wild fluctuations we’ve seen.

Unlike other major markets, the main index here – the Shanghai Composite – is dominated by small retail investors – individuals investing their savings.

Some 80% of urban Chinese households are said to own shares, according to research by Credit Suisse, and until recently it has felt like a one way bet.

We were directed through the hutongs, the capital’s traditional narrow alleyways, to Mr Zheng’s shop – the man known locally as ‘The Stock God”

Inside, in between serving customers, he was checking the markets on a small laptop beside the till.

He made so much last year, he bought himself an Audi A6.

His dream is to earn enough to retire, to return to his home town. He admits last week’s crash gave him a fright.

Zheng Liangyu said: “Yes, I was very worried. I got calls asking me if I have sold the stocks, asking me to be careful.

“But I have experienced the rise and fall a lot, I’m quite calm about it.”

Next door but one we met Ma Anxi, who runs a public shower facility, and wants to have enough money to take his son on holiday abroad.

He has lost around a quarter of the £20,000-worth he has invested so far.

Mr Ma said: “Every day I lose money. I’m just an ordinary person, I don’t earn that much, then I lose money in the stock market, of course I was scared.

“I heard news about people who borrow a lot of money, and then jump off buildings, it’s scary. Even if I didn’t invest a huge amount, it’s money I worked hard for.”

Across the city, on his lunch break in the capital’s financial district, Mr Feng showed us his portfolio on his phone.

He has put almost all his savings into the stock market, so far he’s down the equivalent of £20,000.

He wants the Chinese government to do more.

“I think for individual investors, we are normally a little behind in terms of understanding the rules and information,” Mr Feng explained.

“The government says you must be responsible, but the big guys just reduce or short their stocks as they wish, this is not something we can control.

“So I really hope the government can increase the efforts of supervision and punishment, and make the information from companies more transparent.”

The speed and the scale of China’s growth has been dizzying, but along with the skyscrapers, the country has also been accumulating debt.

Fears over the potential consequences of a Chinese slowdown rattled international markets last week, as global commodity share prices crashed alongside the shanghai composite.

But Dr Liu Qian, deputy director of the Economist Intelligence Unit’s Chinese Service, says the Chinese economy is developing and neither the stock market, nor traditional manufacturing-oriented statistics tell the full story.

He said: “Be it the stock market, electricity usage, industry production, trade data, or last week’s purchasing managers index, all of these traditional economic indicators are pointing to a possibly weaker and weaker economy, so I can certainly see why people are worried.

“But that said, the reason why I use the word traditional is because the Chinese economy is also evolving. People used to think about China as a cheap labour, manufacturing story, but it’s no longer just like that.”

Investors here, and those who depend on this, the world’s second largest economy abroad, will hope she’s right.

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