‘There’s no way I can lose’: Inside China’s stock-market frenzy

Like millions of amateur investors across China, Min Hang has become infatuated with the country’s surging stock market.

“There’s no way I can lose,” said the 36-year-old, who works at a technology startup and opened her first trading account in Beijing on Tuesday. “Right now, I’m feeling invincible.”

Five years after China’s last big equity boom ended in tears, signs of euphoria among the nation’s investing masses are popping up everywhere. Turnover has soared, margin debt is rising at the fastest pace since 2015 and online trading platforms are struggling to keep up. Over the past seven days alone, Chinese stocks have added more than $1 trillion of value — far outpacing gains in every other market worldwide.

While it would be easy to dismiss as a replay of this year’s Robin Hood rally in the United States, China’s budding equity mania could in many ways be more consequential. Unlike in most major markets, individual investors account for the lion’s share of stock trading in China and have been prone to extreme swings in sentiment that can have ripple effects on the economy and monetary policy.

For now, indicators of market overheating are still comfortably below levels reached during the height of equity bubbles in 2007 and 2015. The risk is that breakneck gains — stoked in recent days by bullish articles in state-run media — could eventually result in a destabilizing crash.

Stocks extended gains Wednesday, with the CSI 300 Index adding 1.6 percent in a move befitting Beijing’s call for a slow bull market.

Leo Li, a 28-year-old freelance screenwriter in the southern city of Kunming, says he’s “pretty much all-in” on stocks but isn’t borrowing to maximize returns — yet.

“With leverage, it only makes sense to add it when you can be 100 percent certain of gains,” said Li, adding that his family sold property last year to buy stocks. “That usually happens when the old grannies start rushing in during the mid to late stage of a rally. We are not there yet, but when the time comes I will be ready.”

In 2014, encouraging words by state media helped revive interest in what had been a dull equity market. The result was a debt-fueled speculative bubble that burst five years ago, wiping out $5 trillion of value. The fallout triggered regulatory clampdowns on speculative and insider trading.

Tim Zhao said he learned his lesson in 2015 after losing an “astronomical” figure in the stock crash. He is back in the market for a rally he sees lasting as long as five years. “Everything is different this time,” said the 44-year-old from his office in Beijing, where he runs a movie equipment business. “It’s a lot more complicated.”

He started to build positions in February after stocks plunged at the height of China’s coronavirus outbreak, focusing on chipmakers and health care names. He declined to say how much he has invested this time around, but said he won’t be using leverage. “I want to make money, but I’m not desperate,” he said.

Others don’t see a repeat of 2015.

“Regulators will keep things in check to maintain a slow bull market,” said Roger Lin, a 45-year-old entrepreneur who runs a trading company in the southeast port city of Xiamen. He invested about 200,000 yuan (about $28,000) in the market at the start of the year and added another 50,000 yuan last week, using part of a three-year credit loan.

“I’m confident that I’ll be able to exit just before the market slump,” he said. “You can do that as long as you’re not too greedy.”

— to www.bostonglobe.com

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