BIZCHINA / Weekly Roundup
Irrational exuberance? Not when stocks soar
By Wang Zhenghua and Ida Relsted (China Daily)
Updated: 2007-05-14 09:30
Investors buy and sell shares using self-service machines installed at a
stock brokerage on May 9 in Jinan, capital city of East China's Shandong
Province. [China Daily]
On a warm morning, loud cheers erupted sporadically from the crowd of
elderly men and women who had their eyes glued on an array of half a
dozen television screens. Last Friday, they were sitting in a stuffy room
on the second floor of a nondescript office building in Shanghai.
Clutching a mobile phone in one hand and an electronic calculator in the
other, a sweating man donning a short-sleeved shirt and baggy pants,
mutters to himself: "Go, baby, go."
They are watching the live broadcast of real time changes in share prices
on the Shanghai Stock Exchange, courtesy of Industry Securities, a large
stock broking firm.
On the other side of the room are 32 self-service machines for the
company's clients to buy and sell shares.
"Don't you think this place looks like a nursing home for old folks?"
chuckles Chao Yin, Industrial Securities' deputy general manager. Some
people who frequent the office are in their 80s and 90s.
Indeed, stock punting has become the biggest game in town as in the rest
of the country enthusiastically played by people of all ages and income
levels. There are reports that high-school students have formed
investment groups to pump into shares, whose prices seem to defy the law
of gravity.
Warnings of a bubble from officials and experts including the central
bank governor recently seem to have fallen on deaf ears of people
desperate to put their money in the red hot equities market that has been
drawing in about 400,000 new players a day across the country.
At Chao's brokerage, about 40 to 50 people have opened accounts per day
recently, the manager said. Last Friday, there were about 20 people
waiting outside the room to enrol. Nearby, empty forms, about 40 kinds in
four categories, were piled high on a table.
But retail investors frequenting the stock brokerages are a
poorly-educated lot, with barely any knowledge of stocks and unaware of
potential risks, Chao said.
"These individuals, especially new gamblers, are short of basic knowledge
and barely know how to operate online or over the telephone, so they
gather here every working day and make things messy," said Chao.
"We are under a great workload and pressure. We don't even have time to
dine out or have enough sleep," he said, rubbing eyes with shadows
beneath them.
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(For more biz stories, please visit Industry Updates)
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