Chinese stock market's Olympic specialty: Tumbling
The Shanghai index has fallen 15% since the Beijing Games opened, including a big hit today. Investors, who had hoped for a reversal of the year's downward trend, are angry.
shanghai -- Many Chinese investors had hoped the Olympics would give a boost to their nation's sagging stock market. So far, just the opposite has happened.
The benchmark Shanghai composite index tumbled 5.3% today, falling for the sixth time in seven trading sessions. The index has plunged 15% since the Beijing Games opened Aug. 8, and it now stands at 2,320 -- down 56% since the start of the year, making it one of the worst performers in the world.
"Everybody said the market would turn [positive] in July before the Games, so we listened and stayed in it," said a retired textile worker surnamed Gu, her 70-year-old eyes fixed squarely on the stock tote board at Haitong Securities in Shanghai. "In July, they said that the market would return when the Olympics came. What spirit is that? Now we are all dead and have no spirit left in the market."
The plunge in the Shanghai and smaller Shenzhen exchanges has baffled some analysts as well. There's "no special reason" for what happened today, said Fan Dizhao, investment manager at Guotai Asset Management Co. in Shanghai.
In recent days Beijing has issued a batch of economic reports, but nothing so big or worrisome as to warrant a steep fall. Inflation statistics showed consumer prices were edging down, but producers were paying more for goods, suggesting corporate profits are facing a squeeze. Yet China's exports have accelerated and retail sales continue to boom. Overall, China's economy is cooling down, but it's still growing vigorously considering the economic malaise in much of the world.
But China's stock market often moves to its own beat, without regard to the broader economic condition. For much of this decade, Chinese stocks languished even as the domestic and global economy flourished. Then, in 2006, the Shanghai index jumped 130%, and it doubled the next year, as millions of new investors bet feverishly on big and quick returns.
As shares fell back this year, many investors clung to the belief that the Chinese government would intervene to prop up the market before the Olympics, to buoy people's spirits and maintain stability ahead of the Games. When that didn't happen, and investors were confronted with mixed signals on the economy, pessimism took hold. "The market is a little out of control now," said Zhang Qi, an analyst at Haitong Securities. "Investor confidence seems to be collapsing."
But industry experts say Chinese stocks may be primed for a rebound soon.
