Chinese youths like Li Hao are trying to make bank on China's stock market see-saw. While some have profited, others are facing painful losses. SINGAPORE: Graduation might still be eight months away, but accounting major Li Hao from Hunan province in China is already pulling out all the stops to ensure a job is lined up.
In the latest back and forth, Chinese stocks - and wider Asian shares in general - declined on Monday after a closely-watched legislative meeting last week disappointed investors. Shenzhen-based securities company Ark of the Times, similarly noted an influx of new customers since late September’s policy announcements. Thirty per cent of the newcomers are under 35 years old, according to founder and director Wei Haihong, 57.
Analysts say this is in marked contrast to the Chinese youths’ previously conservative investment patterns. China’s central bank unveiled a raft of measures on Sep 24 to shore up a stuttering economy. Offering more funding and interest rate cuts, the broader-than-expected package was the biggest stimulus since the pandemic.
His younger compatriots have also been swept up in the stock market buzz, with many turning to online forums for support. One such platform, Taoguba, features over 170 threads on"post-2000" discussions. Meanwhile, Zhejiang University’s internal online forum is flooded with stock market posts, reflecting the keen interest of varsity students.
To him, investing in China’s domestic A-shares is not just taking a chance, it’s a “100 per cent gamble”. A-shares are the shares of mainland China-based companies that trade on the Shanghai, Shenzhen and Beijing bourses, and use the renminbi for valuation. “Chinese investors have lower stock literacy more of a gambling mindset - they are mostly investing on sentiment,” said Mr Li, who only began investing in late July after being introduced to the stock market through an inter-varsity competition. Organised by a department of the Communist Youth League Central Committee, it ironically aimed to enhance students’ financial literacy.
Mr Wei, the securities firm founder, observed that new investors are increasingly focused on short-term gains due to “volatile fluctuations”. China has been on an all-out push to fire up its domestic consumption engines as it strives towards economic recovery amidA man walks past a screen showing Chinese stock market movements in Beijing on November 7, 2024, after US Republican Donald Trump won the US presidential election.
“In China, as the bond market doesn’t have the depth and breadth as the US, the only clear asset class that investors can shift to is the equity market. Investing in stocks is also relatively more affordable than the property market, as the financial outlay is much lower. ” As opposed to short-term speculation, Mr Lee believes that cautious participation by young people in the stock market will contribute to “gradual and sustained upticks”, which could aid the consumption drive as they reap the dividends and potentially spend more.
The former financial manager Mr Wang has ruled out investing in domestic shares long-term for retirement planning purposes. Mr Lee from SMU predicts it will take some years before China’s stock market stabilises. “A decade, if China’s lucky,” he said. He believes the Chinese government wants a gradual rally in line with market fundamentals.