HUGE investments in stock exchange facilities saw Changsha securities operators fall into the red in the first six months of this year. According to the People's Bank of China (PBOC) Changsha branch, the city's 17 securities companies reported total losses of 1.39 million yuan (about HK$1.26 million) in the first half. The result contrasts sharply with a cumulative gain of 12.18 million yuan since the first securities company opened in Changsha in May 1988, to trade in bonds. Tan Minghan, chief of the PBOC's monetary management department, said the profit slump was due mainly to heavy investment in communication facilities following the opening of stock exchanges in Shenzhen and Shanghai. 'Stock trading is still a new financial tool in Changsha,' said Mr Tan. 'The 0.5 per cent of the turnover which goes to the securities firm as a transaction fee is not sufficient to cover the investments at this development stage.' In July, the bank had 26,661 registered stock investors in Changsha, with 327 having trading accounts of more than 100,000 yuan. Since 1988, shares worth more than 423.38 million yuan have changed hands, while 2.5 million yuan has been injected into the options market. Another 638 million yuan has been invested in bonds. Liu Xiaobin, deputy manager of Xiancai Securities, said his company had spent more than six million yuan on telecommunication links with the Shenzhen and Shanghai exchanges in a move to promote stock trading. The information system includes two sets of share-price monitors for the exchanges, and a television system to receive analysis reports of the Shenzhen market, and a radio broadcast of stock movements in Shanghai. 'Information on price movements is transmitted through satellite. The time-lag is close to zero,' said Mr Liu. Xiancai, which opened in February last year, has already had about 12,000 clients. Turnover reached a high of 50 million yuan a day when bullish sentiment dominated the market this summer. Backed by the financial education department of the PBOC in Hunan, Xiancai was also the first securities firm to introduce a card machine for automatic stock trading. Investors with an account of at least 100,000 yuan are eligible to apply for the services. An investor needs only to insert the magnetic card to a special trading terminal and enter a personal code to sell or buy any shares immediately according to the funds available in the account. Other retail investors have a choice between over-the-counter and telephone trading. Using the trading hall as a live teaching experience for Changsha people, Mr Liu said the company would also publish company analyses and market reports. 'Unlike other gambling games, stock trading uses our intelligence,' he said. 'No doubt you still see big selling when prices point slightly down and see aggressive buying when the index goes up. But please wait, you must witness how trading becomes more rational.' Mr Liu urges listed companies to be more transparent, complaining that Changsha, far from the exchanges, often misses reports on company plans and activity. He said there were more elements to making a rational investment decision than price movement, including factors such as the percentage of profits to be distributed to directors.