Mainland stocks see a year of big losers

PUBLISHED : Wednesday, 14 December, 2011, 12:00am
UPDATED : Wednesday, 14 December, 2011, 12:00am


About two-thirds of mainland investors say they have lost more than 20 per cent of their equity investments this year, suggesting another crisis of confidence in the stock market.

According to a survey by internet portal Sina, 51.8 per cent of nearly 10,000 respondents said their investment loss exceeded 20 per cent, while 14.4 per cent reported losses of more than 50 per cent.

The results added to evidence that individual investors are the main victims of the volatile market.

The Shanghai Composite Index has slumped 20 per cent so far this year, though the economy grew 9.4 per cent in the first three quarters.

But mounting worries of an economic slowdown and expectations of worsening corporate earnings overshadowed the market, leaving millions of investors to suffer losses, at least on paper.

The survey showed that 48 per cent of investors would cash out if there was a rebound, boding ill for next year's market outlook.

The benchmark slid 1.87 per cent to 2,248.59 points yesterday, to be nearly unchanged from the level 10 years ago. Investors lost an average of 40,000 yuan (HK$48,700) in that time, a Beijing-based hedge fund manager said.

That is because the index tracks all stocks listed on the Shanghai bourse and is a gauge of total market capitalisation. But in the past decade there has been a huge number of new offerings on the Shanghai and Shenzhen stock exchanges, which should have greatly increased total market value. However, since the index is at the same level, it indicates that retail investors have lost trillions of yuan.

'It was wrong for me to chase the rally in 2007 when the market surged at an irrational pace,' said Coco Zuo, who bought 500,000 yuan of shares. 'But I started to load up on stocks last year when the market sentiment was bad, only to find myself getting stuck with a big loss again.'

The main gauge jumped 97 per cent in 2007, hitting a high of 6,092.06 points in mid-October before diving 65 per cent the next year, its biggest annual decline. In 2009, millions of investors hoped the market would re-enter the record territory of 2007 and began to jump back in.

The key index jumped 80 per cent in 2009, buoyed by an influx of speculative capital due to Beijing's monetary easing. However, a flood of initial public offerings in 2010 drained liquidity out of existing stocks, with the index losing 14.3 per cent.

The market continued to drop this year, battered by the government's monetary tightening and fears about a double-dip recession in the global economy.

'Mainland investors are still ignorant, though they have lost a lot in the roller-coast market,' said Citic Securities analyst Cheng Weiqing. 'They were not aware of the bad economic conditions when the euro-zone debt crisis took place, but many of them were still expecting a turnaround.'

Most mainland investors believed the market might have bottomed out when the index hit 2,300 points.


The Shanghai Composite Index has slumped this much so far this year, while the national economy has grown 9.4pc