China Stock Market Lost 14 Trillion Yuan in Eight Months
The market value of A Share in Chinese stock lost 3.68 trillion yuan (US$534.9 billion) during the four trading days last week. Although A Share reached its peak last year, within less than a year, the market value of A Share and B Share stock markets decreased from 32.71 trillion yuan (US$4.74 trillion) to 18.74 trillion yuan (US$2.72 trillion). In other words, nearly 14 trillion yuan worth of wealth (US$2.03 trillion) evaporated within eight months of the bear market. A-stock declined ten times consecutively for the first time in its history, to a 15-month low point of 2769.
According to an article by Weekly Economic News on June 17, China's 2007 Gross Domestic Product (GDP) was 24.66 trillion yuan (US$3.54 trillion). However, the nearly 14 billion yuan that was lost in the stock market had consumed 56.65 percent of China's GDP.
CCTV's program Half Hour Economy initiated a survey together with many Internet sites, and as of 11 p.m. on June 18, 764,588 investors participated in this survey. The statistics showed that as of January 1, 2007, 92.5 percent of the investors had suffered losses in their investment and 60 percent of those lost more than half of their financial holdings. Only 4.3 percent of the participants made a profit, and 3.2 percent of the participants barely broke-even.
The survey showed that 82.7 percent of the investors thought that existing problems in controlling and monitoring of China's A Stock market led to their losses, 10.4 percent of the investors thought their losses were caused by an immature analysis on the macro economy and personal stocks and bond choices. The other seven percent of investors believed the reason for their losses are due to unskillful speculation in the stock market.
Experts from NetEase (www.163.com) currently consider the stock market to be in recession. A large number of IPOs fell below the initial offering price after entering the market, which indicates the market is slowly losing its ability to raise funds. More than 90 percent of investors are losing money. This indicates the market is not healthy when it has such a large fluctuation and is struggling to raise funds.
However, Li Deshui, former National Statistic Bureau Director expressed that the sharp plunge of the current stock market is temporary, and the Chinese stock market will not discourage the confidence of mature investors.