Stock price swings bring out the greed and fear of punters
Updated: 2015-07-01 08:52
By Hu Yuanyuan and Yang Ziman(HK Edition)
Stock market is probably the best place to demonstrate the greed and fear of investors in a highly leveraged market.
People who use margin trading to leverage their stock buying have taken a beating from the latest stock plunge. Only a few could profit from the strong rebound on Tuesday.
Eric Liu, a 37-year-old company executive working at one of the Chinese mainland's leading investment banks, lost all his previous gains plus part of his capital in the market crash.
Liu earned more than 400,000 yuan ($64,499.5) from stock investment when the market was booming in May. At that time, he was thinking of investing in a hedge fund to lock in his gains. On June 12, when the benchmark Shanghai Composite Index reached a record high, he invested 2 million yuan in a stock fund, borrowing the money from three different banks.
At that time, "I just paid 210,000 yuan for my daughter to study in an international primary school, so I wanted to win back the money in the stock market", said Liu.
But the benchmark index dived on the first day he invested the 2 million yuan. He unloaded all his holdings on Monday, just before the strong rebound on Tuesday when the benchmark Shanghai index posting the biggest gain since 2009 after swinging 432 points.
The Shanghai Composite Index closed at 4,277.22, up 5.5 percent or 224.19 points, while the Shenzhen Component Index rallied 5.7 percent to 14,337.97.
"I know the bet could be risky, but I just can't believe I had such a back luck," Liu exclaimed. Now, he has to pay more than 26,000 yuan each month to the banks.
Liu is not the lone loser in this yo-yo market.
Wang Gang, who owns a company in Beijing, gained 1.2 million yuan in the stock market. But he lost it all plus the original investment capital 1 million yuan in the latest bloodbath.
"I was too greedy. I should cash in when I made my targeted 1 million," said Wang. He sold half of his shares on Monday, in a panic.
But those investors who cashed out before the plunge are laughing all the way to the banks.
Ge Qiang, a lecturer at Renmin University of China, invested 300,000 yuan in the stock market in the second half of last year. He decided to quit the market in mid-May after he lost 170,000 yuan in short selling stocks.
"When I was playing with my daughter on campus that day, I suddenly realized there were many more important things in this world. So I just closed my account the next day."
Xia Feng, an investor in Ningbo, Zhejiang province, is also a winner. He cleared his stock account when the market plunged to 4,700 and began buying again on Tuesday morning, gaining almost 20 percent in one day.
"As an individual investor, I don't have inside information and the money the market makers have. So, the only way to make money from the stock market is to learn and train myself not to be so 'human'," said the 36-year old primary school teacher.
Du Lingling, a 27-year old journalist, have never bought any stock. "At one point, every journalist I know was talking about buying stocks. They tried to persuade me to give it a try, saying that making money in stocks was so easy," said Du. "But I know I'm a sore loser," she said.
Ren Zeping, managing director and chief macro analyst of Guotai Junan Research Institute, said that margin trading is a new financing tool that is not suitable to most investors.
"The securities regulator should prepare a plan to keep the risk of margin trading under control," said Ren.
Tian Siqi contributed to the story.
Contact the writers at email@example.com
Since the Chinese mainland's stock market began to surge late last year, stock account openings by mainland punters have hit a record high this year, while margin trading has also skyrocketed to trillions of yuan. Experts say that margin trading is a new financing tool that is not suitable to most investors, though. asia news photo
(HK Edition 07/01/2015 page9)