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Category: Ningbo News
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Published: Thursday, 02 July 2015 09:33
Stock market is probably the best place to demonstrate the greed and fear of investors in ahighly leveraged market.
People who use margin trading to leverage their stock buying have taken a beating from thelatest stock plunge. Only a few could profit from the strong rebound on Tuesday.
Eric Liu, a 37-year-old company executive working at one of the Chinese mainland's leadinginvestment banks, lost all his previous gains plus part of his capital in the market crash.
Liu earned more than 400,000 yuan ($64,499.5) from stock investment when the market wasbooming in May. At that time, he was thinking of investing in a hedge fund to lock in his gains.On June 12, when the benchmark Shanghai Composite Index reached a record high, heinvested 2 million yuan in a stock fund, borrowing the money from three different banks.
At that time, "I just paid 210,000 yuan for my daughter to study in an international primaryschool, so I wanted to win back the money in the stock market", said Liu.
But the benchmark index dived on the first day he invested the 2 million yuan. He unloaded allhis holdings on Monday, just before the strong rebound on Tuesday when the benchmarkShanghai index posting the biggest gain since 2009 after swinging 432 points.
The Shanghai Composite Index closed at 4,277.22, up 5.5 percent or 224.19 points, while theShenzhen Component Index rallied 5.7 percent to 14,337.97.
"I know the bet could be risky, but I just can't believe I had such a back luck," Liu exclaimed.Now, he has to pay more than 26,000 yuan each month to the banks.
Liu is not the lone loser in this yo-yo market.
Wang Gang, who owns a company in Beijing, gained 1.2 million yuan in the stock market. Buthe lost it all plus the original investment capital 1 million yuan in the latest bloodbath.
"I was too greedy. I should cash in when I made my targeted 1 million," said Wang. He sold halfof his shares on Monday, in a panic.
But those investors who cashed out before the plunge are laughing all the way to the banks.
Ge Qiang, a lecturer at Renmin University of China, invested 300,000 yuan in the stock marketin the second half of last year. He decided to quit the market in mid-May after he lost 170,000yuan in short selling stocks.
"When I was playing with my daughter on campus that day, I suddenly realized there were manymore important things in this world. So I just closed my account the next day."
Xia Feng, an investor in Ningbo, Zhejiang province, is also a winner. He cleared his stockaccount when the market plunged to 4,700 and began buying again on Tuesday morning,gaining almost 20 percent in one day.
"As an individual investor, I don't have inside information and the money the market makershave. So, the only way to make money from the stock market is to learn and train myself not tobe so 'human'," said the 36-year old primary school teacher.
Du Lingling, a 27-year old journalist, have never bought any stock. "At one point, every journalistI know was talking about buying stocks. They tried to persuade me to give it a try, saying thatmaking money in stocks was so easy," said Du. "But I know I'm a sore loser," she said.
Ren Zeping, managing director and chief macro analyst of Guotai Junan Research Institute,said that margin trading is a new financing tool that is not suitable to most investors.
"The securities regulator should prepare a plan to keep the risk of margin trading under control,"said Ren.
Tian Siqi contributed to the story.
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