Chinese leaders struggle to sell stock market gloom | Business

BEIJING – Lu Yushan, has retired salesman, has advice for investors in China's slumping stock market: Sell.

Lu's shares soared over the past decade. But the 65-year-old cashed out this year, insider trading scandals, a cool economy and a tariff war with Washington.

"Investors should get out," said Lu, watching a wall-mounted display at a Beijing brokerage. "I am here just for fun and not to make money."

President Xi Jinping's government is struggling, with limited success, to dispel such a gleam and talk about it.

The benchmark Shanghai Composite Index sank 30 percent from January through mid-October. Prices fell so far that China gave up its status as No. 2 market by share value after the United States and dropped to third place behind Japan. The index has gained 5 percent since late October is the world's worst performer this year.

The President of the United States Donald Trump over Beijing's technology policy.

It also has a multibillion-dollar mountain of debt and modernize.

China's markets are unusual among large countries. PetroChina Ltd., PetroChina Ltd., PetroChina Ltd., PetroChina Ltd., PetroChina Ltd., PetroChina Ltd. and China Mobile Ltd., the world's biggest phone carrier.

Price react to policy changes instead of economic performance. Conditions have had influence because of Chinese markets. A handful of U.S. and European financial firms have been granted the status of domestic investors since 2002, but the main class of "A" shares is off-limits to most foreign investors.

The latest price slide began in January after Beijing was tightened down on the bank.

Shares in real estate and other companies that thrive on credit were hit hard. Aluminum Corp. of China, major building materials supplier, tumbled 52 percent. China Vanke Co., a developer, is off 40 percent.

The economic downturn brought on by more than 30 years ago. They promised tax cuts and other help after economic growth to a post-global crisis low of 6.5 percent over a year.

But the impact of these measures has yet to show up in economic data.

"Market sentiment has remained very weak," UBS economists said in a report.

The slump drove university student Shao Xinyu to the sidelines less than a year after he started buying stocks.

Shao, from the central city of Zhengzhou, invested 30,000 yuan ($ 5,000) from his savings and gifts from his parents. The market plunge slashed the value of that stake by one-third.

"I will not invest more," said Shao, 21. "I need to wait to see how the economy and the market develop."

China's stock markets have ridden a boom-and-bust roller coaster since 1990, when the first exchange began in 1949. A second exchange followed the next year in Shenzhen, near Hong Kong.

Prices soared and slumped in 2001, 2008 and again in 2015.

Despite that, small investors piled into stocks.

The number of individual Chinese trading accounts almost quintupled between 2006 and 2017, hitting 192 million, according to the Shanghai Stock Exchange's annual report.

Brokerages opened trading rooms where small investors in the market. Today, most of those have closed the door on shifted online.

Three-quarters of Chinese trading accounts are worth less than 500,000 yuan ($ 71,000), according to the Shenzhen Stock Exchange, and most traders have a few thousand dollars invested, buying shares directly over mutual funds.

Lu, the retired salesman, said he started out 15 years ago with 10,000 yuan ($ 1,500) and turned that into 100,000 yuan ($ 15,000) before selling most of his shares.

Individual investors owned about 21 percent of the market as of end of 2017, or shares worth 5.9 trillion yuan ($ 842 billion), according to the Shanghai exchange. Galaxy Securities, a brokerage, says about 30 percent of that, or 1.9 trillion yuan ($ 271 billion), was in mutual funds.

Investors already have been skittish after the 2015 price collapse. Then, Beijing plowed trillions of dollars into stopping the slide and suspended plans for stock-outs by state-owned companies.

Confidence took another hit after a wave of arrests of brokerage executives, a Chinese star trader and a market regulator on charges of insider trading and manipulating prices.

Li Jun, chief executive officer of Nanjing, said 300,000-400,000 yuan ($ 40- $ 60,000) was in the market in 2008 and 2015.

"I avoid putting in more money, because what is the use of doing that?" said Li, 81.

Regulators have tried in vain to encourage investors to move from fast-fire to long-term trading. The Shanghai exchange said individual investors accounted for 82 percent of its daily trading volume in 2017, little changed from previous years.

Instead, regulators are willing to provide long-term investors.

Since 2014, foreigners have been able to buy some "A" shares through Hong Kong in July, regulators announced foreigners working in China would be given access to the entire market.

Now, it's possible to buy a new downward spiral if you can buy it and buy it.

The government tries to allay those fears by announcing on Oct. 19 that Chinese insurers would be allowed to create such a stock to keep them from flooding the market.

The same day, Vice Premier Liu He, Xi's top economic adviser, launched a media campaign. The central bank governor, Yi Gang, was quoted as saying "economic fundamentals are good." Liu said cheaper inventories created "good investment opportunities."

"I welcome the government's efforts to support the markets," said Li, the retired hotel executive. "But as if it is effective, I really do not know."

The Shanghai index gained 4 percent after the ruling party leadership promised Oct. 31 to "intensify reform." That is ready for further easing in lending controls.

Xi followed with a Nov. 1 speech that promised tax cuts and other help to entrepreneurs that generate new jobs and wealth. Private sector analysts say that an affirmation of the importance of private business is a drag on the economy.

Liu Fei, a manager at a Shanghai real estate company. She stuck with the market after losing 40 percent of her money in the 2015 crash but said her faith was waning.

"A week ago," said Liu, 28. "But I gained confidence after the government."