Good article
Think tech bubble, when every joe blow was making a killing on anything that rhymed with not mom, but on a MUCH larger scale
Message 24124799
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Poor, Greedy And Powering China's Stock Market Boom
Shu-Ching Jean Chen, 01.16.08, 12:43 AM ET
The engine behind China’s booming stock markets is an army of short-sighted, middle- and low-income investors who are betting the bank with their meager earnings, according to a new survey that provides the most detailed view yet of the Chinese investing public.
They are middle-aged and highly educated, but mostly live on the margins of society, including large numbers of early retirees and workers retrenched by downsizing state-owned enterprises, the Securities Association of China found in a survey conducted at the end of 2007.
The survey reveals for the first time the collective identity of China’s investors, 136 million strong as of October, with their numbers increasing by 130,000 every day on average. Nearly a quarter of Chinese investors only opened their brokerage accounts in the last year, 10 times more than a year before.
This gold rush by middle- and low-income investors into the Chinese stock market both fed and was propelled by a 93% rise in the benchmark Shanghai Composite Index last year, which followed a doubling in 2006.
And the bull run doesn't yet seem near an end. China's two stock markets in Shanghai and Shenzhen earlier this month briefly overtook Japan as the world’s second-largest stock market by market capitalization.
The survey shows the Chinese stock market boom is anchored by investors ranging in age between 33 and 54 who are highly educated, with more than 60% of the total boasting at least a college education.
Nonetheless, the Securities Association said only 30% of China's 136 million investors have monthly incomes above 5,000 yuan ($690), a level that is moderately well off by national standards. The combined shareholdings of individual investors accounts for 48% of market capitalization and 98% of mutual fund assets. Mutual funds account for about 30% of market capitalization.
More than half of Chinese investors do not have more than 300,000 yuan ($41,379) available to invest, and a quarter have less than 100,000 yuan ($13,793).
"[They] have little awareness of their rights as shareholders. Most of them are just interested in short-term speculation," Huang Xiangping, president of the association, was quoted by the China Daily as saying Wednesday.
As much as 63.4% of those surveyed by the association said they have never voted in a shareholder meeting and 14.3% of them did not know they were entitled to vote.
Their investment horizon is short--they flip their shareholdings every three months on average. |
