Investors rally to bullish market

Individual investors are eager to capitalize on a bullish market after the Shanghai benchmark index reached 3,000 points this summer. Asianewsphoto

As China's stock market rallies from last year's trough, individual investors are eager to capitalize on the market rebound.

From a recent surge in fund sales to the continuing increases in newly opened stock-trading accounts, investors are citing signs of an upward trend.

"It does not make much sense to worry about whether the current rally is a mirage or for real. What's more important is trying to profit from the rebound," said Wang Ping, a veteran individual investor in Beijing.

Last year, Wang said two-thirds of his stock value evaporated with the falling economy, but he has since made up most of his losses, he said.

Wang's positive attitude is common among individual investors eager to ride this year's more bullish market.

That positive attitude was buoyed by news that China reported a 7.9 percent economic growth rate in the second quarter of this year, outperforming most of the world's major economies.

3,000 points

Frank Gong, an equity market researcher and head of the China research division for JP Morgan Chase, predicted recently that reaching 3,000 points is just the beginning of China's bull market.

China's stock market has been rebounding since touching bottom last October.

This July, the Shanghai benchmark index rose to more than 3,000 points without many fluctuations.

Thus, individual investors have become more active in recent months.

China Securities Depository and Clearing Corp reported that 1.63 million new stock-trading accounts were opened in June, up from 1.08 million in May and up from less than 1 million a year earlier.

Zhou Junchen, a stockbroker at a mid-sized domestic brokerage, said the number of investors who come to her for new stock accounts has steadily increased in recent month.

"I had almost no business at all at the end of last year, and now I receive some 10 clients a day," Zhou said.

"Although it cannot compare with the situation during the bullish market in 2007, the market sentiment is gradually recovering," she said.

Zhang Zhengbo, who came to Zhou for a stock-trading account, said he missed his chance to make a fortune in the bull market of 2007 and wouldn't miss a new opportunity this year.

Momentum

Fund investments are gaining momentum, too.

The ChinaAMC 300 Index Fund, the nation's ninth fund this year to base itself on the Shanghai and Shenzhen stock exchange's 300 Index, won a fast response from investors when it debuted on July 7. About 25 billion yuan was raised in less than one week.

"Investors' enthusiasm for funds has risen pretty high, and it appears that the dizzying scene in the bull market two years ago has come back," said Ding Xutao, a wealth planner at the Industrial and Commercial Bank of China.

Liu Jianxin, a fund investor who spent 20 percent of his investment capital to buy the ChinaAMC fund, said he expects the benchmark index that reached 3,000 in July to reach 4,000 points later this year.

Not every investor was as upbeat as Liu.

According to a survey conducted by sina.com, a major website in China, 64 percent of those polled thought the Shanghai benchmark index would linger between 3,000 and 4,000 points this year, while only 6 percent believed it could rise to above 4,000 points.

Cautionary notes

About 66 percent of the respondents adopted a wait-and-see attitude, replying that they will maintain current stock holdings and watch overall stock movements this year.

The survey also showed that individual investors were not satisfied with the return they reaped from the recent market rally.

About 70 percent of the respondents failed to outperform the overall stock market performance, they said.

If the last market crash is a cautionary tale, that's because more investors are staying sober in the face of this summer's numbers.

"I won't make any aggressive bets now because the market is filled with uncertainties," Wei Xing, a veteran individual stock investor, said.

Wei has posted gains of more than 70 percent since the market recovered late last year, he said.

"I'd prefer to defend my current returns by gradually reducing holdings, even though retreat is a hard decision to make in this soaring market," Wei said.

Teng Yuanyan, a wealth planner at Shanghai Pudong Development Bank, warned that investors should be more vigilant in buying new funds, especially when market sentiment is so bullish.

"With the benchmark index crossing 3,000 points, the market is facing huge pressure for major adjustments," she said.

(China Daily 08/03/2009 page4)