Stronger efforts called for at educating China’s 100 million retail investors

Small-scale Chinese retail investors’ intimacy with “junk stocks” remains undiminished from a decade ago, despite regulators’ efforts at encouraging them to buy shares on valuation, rather than on rumour.

According to a senior official with the Shanghai Stock Exchange, the latest trading data shows that some underperforming and unprofitable stocks are still actively being chased by individual investors, who treat the equity market as a casino, hoping to get rich quickly.

The scenario adds further evidence to what a daunting task mainland regulators face in educating the more than 100 million retail investors on how volatile the nation’s share market can be.

On the mainland, investors are considered an individual stock player if their total equity investment on A-shares is worth no more than 500,000 yuan (US$75,8000).

The stock exchange official, speaking on condition of anonymity, would not disclose exact figures about small investors’ asset allocations, or profit and loss levels.

But it is believed that small investors, many of whom are retirees spending their years of savings to punt on stock price swings, have suffered heavy losses owing to the recent roller-coast rides.