Micro stocks shine in China's flagging share market

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China's annus horribilis has seen its stock markets fall, funds run up losses and foreign investors run for the exit. But areas of the market dominated by small stocks and frequented by the country's retail investors have done surprisingly well.

Scores of retail investors are dabbling in micro-cap stocks - stocks whose market capitalisation is tiny - operating under the radar of big funds and investors and their massive market-moving flows.

While institution-dominated companies with large market values in sectors such as banking and manufacturing have faced selling pressure from investment funds in a struggling economy, micro stocks have become neat counter-cyclical targets.or hot concepts such as AI, making the retail rush somewhat similar to last year's meme-stock frenzy in the United States, albeit without short-sellers on the other side of the trades.

"The connivance is hurting the system of value investment, encouraging misbehaviours, and is negative to long-term health of the market."Retail investor Helen Wu is not bashful talking about "stir-frying" - the practice of pumping up stocks with hot concepts. Retail investors are a big force in China. CSRC Chairman Yi Huiman notes that their transactions accounted for about 60% of the total A-shares turnover in late 2022.has slumped 14% this year after sell-offs in once favoured sectors such as battery companies and spirit makers.

 

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Micro stocks shine in China's flagging share marketMicro stocks shine in China's flagging share market
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