After trillion-dollar rout, China stock investors clamour for market intervention as social media posts show frustration at widening losses

Traders returned from the golden week holiday only to take another beating as markets struggle for footing
After almost two years of relentless sell-off, many China-focused funds are on the brink of capitulation, strategist Hong Hao says

China stock market

Jiaxing Li

Published: 4:37pm, 12 Oct 2022

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Stock investors in mainland China are hurting as much as their counterparts in Hong Kong and elsewhere, with the local markets suffering their worst post-golden week holiday decline in four years.

Some vented their frustration at the streak of losses by flooding social media platforms such as Weibo and WeChat, showing people are increasingly disillusioned with Beijing’s zero-Covid measures and geopolitical tensions. The International Monetary Fund has joined a slew of Wall Street banks in slashing their forecasts for China’s economic growth outlook.

Others lamented the absence of the National Team, or state-backed investment funds to help stem the rout that has wiped out US$1.2 trillion of wealth from the onshore equities since China slammed the internet sector by foiling Ant Group’s jumbo stock offering in Shanghai and Hong Kong in November 2020.

“Money does not lie,” one Weibo account user said on Wednesday, when prices slipped for a third day after the markets reopened. “Look at the Shanghai Composite Index. Every part of our life is changing because of this [the zero-Covid strategy].”

Some social media postings on the state of China’s stock market. Photo: Weibo

The Shanghai stock index slumped 11 per cent last quarter, shrinking the market capitalisation by 3.9 trillion yuan along the way. Traders returned from the golden week break on October 10, only to take another blow as the index broke through the 3,000-point psychological floor. It rebounded to close at 3,025.51 on Wednesday.

Hong Kong stocks ‘closer to the bottom’ after breaking 17,000-point floor, but trades are only for the brave, strategist Hong Hao says

The index surpassed the 3,000 mark about 15 years ago, “and the entire generation of Chinese investors has been fighting ‘The Battle of 3000’ since then,” Hong Hao, a market strategist at Grow Investment Group, said in a Twitter post earlier this week. It’s getting jaded, he added.

“China’s slowdown is a much-discussed topic in the global investment community,” he added. “After almost two years of relentless sell-off in both on and offshore Chinese markets across the board, many China-focused funds are on the brink of capitulation.”

China’s mutual fund industry, with 1,021 funds dedicated to equity investments, suffered a 22 per cent loss on average this year, according to Bloomberg data. Only 18 of them have stayed above water, many benefiting from bets on the energy sector as commodity prices climbed.

Authorities in Beijing may be listening to the cries for help. So far, however, they have offered little beyond some soothing words in state-run news outlets.

“The catharsis will be temporary, and the sentiment will not impact the mid- to long-term trend of the market,” the Securities Daily said in a front-page opinion piece on Wednesday. “The big picture on the economy remains intact, and the market sentiment will gradually improve,” it said.

That clearly does not go far enough for some traders.

“National Team, I’m begging you, please intervene,” another Weibo account person said in a tweet on Wednesday. “These are the money we earned with blood and sweat.”

Additional reporting by Zhang Shidong