China's investors lament stock market clampdown
By Edwin Chan
SHANGHAI, Feb 13 (Reuters) - From the glum, downcast looks on the faces of investors clustered around the trading boards at Shanghai's brokerages, one might think this is the saddest place on earth at the moment.
After hosting trading for the world's best performing markets last year, usually raucous securities houses have turned abruptly quiet. Investors, who just weeks ago excitedly exchanged stock tips with friends, now sit and stare mutely at giant red numbers flashing acoss the board.
Their bull market has been smothered by the slowly spreading net of the China Securities Regulatory Commission, which is intensifying a probe into price-rigging and stock market fraud.
The clampdown began with investigations into price-rigging in two high-tech firms and has since widened to include dozens of securities branches, banks and financial institutions.
Shanghai and Shenzhen indices have endured an abrupt reversal and now rank among the world's worst performers this year, to the dismay of retail investors who listened to analysts and economists talk up the market last year.
"I believed them, so I put all this money in there," said Xiao Zhang, a rotund businessman in his mid-forties, gesticulating wildly with a lighted cigarette.
"Then some guy said the market was like a casino, and it fell. I'm not going to invest anymore, I'm not going to believe them anymore," he added as other investors nodded in agreement.
Zhang was referring to comments by leading economist Wu Jinglian in January, around the time regulators announced their probe into trading of two high-tech firms.
"Even casinos have rules and you cannot look at other people's cards. But in our stock market, some people can look at others' cards, cheat and lie. Manipulation, stir-frying and rigging prices is paramount," Wu told state television.
Now Zhang complains that he cannot get into the market because he used up all his spare cash and he cannot get out because he would take a substantial loss.
Shanghai B shares, which soared 136 percent last year, are down nearly 12 percent for 2001. Shenzhen's have fallen nearly 10 percent. Trading volumes have plummetted since the start of the year as investors, spooked by the ongoing probe, fled the market.
NET TIGHTENS
Regulators launched an investigation into price manipulation in December, and together with police are now probing more than 20 securities houses, banks and institutions in connection with trading of shares in Yorkpoint S&T Co (0008.SZ) and Shenzhen China Venture Capital Co (0048.SZ).
Things may get worse before they get better.
The CSRC's top adviser, Anthony Neoh, said on Monday the markets had better get used to stronger supervision, as the market watchdog had armed itself with the technology to improve monitoring of the markets and enforcement of rules.
"This is the beginning, in fact, of what I hope would be a new stage in better regulation of the markets," he said.
But this debate is academic to the average investor, now watching savings evaporate as prices deflate.
"Why did they have to do this now? The timing is wrong and we investors have suffered from it," said a middle aged man who would give only his surname, Xu.
"The CSRC are doing their job, that's normal. But they should have done this long ago. Why are they suddenly doing this?"
At many brokerages, the economist Wu, long a favourite of the small-time investors for his criticism of price manipulation or stir frying, is now a target for blame.
"What's he trying to do? The market is like a child. You have to slowly rear it from young. You can't just strike it dead with one blow!" spat one man in between curses.
Investors say they are proceeding cautiously until the probe reaches some conclusion, or some other positive development sparks a rally.
Jin Zhifeng, a 40-year-old government employee, said she had hardly traded any stock over the past few days.
"We common citizens just want the market to be more stable, that's all," she said. "But now things are not going so well," she added, glancing wistfully at her stock screen.
"We have to be more careful now."
04:59 02-13-01 |
