China's stock market is not for attachments, but for gaming - so say investors

Recently,
hearing were always news about Greece,
but now their impact on the market as
if at all the "Disable". Instead
this engine and real market
"Mixer" in the last days was China.
Many are familiar with the facts and figures
the situation in the Shanghai market, but recent
Events also shed light on the less
known dynamics - these are separate
behavioral habits and attitudes themselves
Chinese market participants. MarketWatch columnist portal
JJ Zhang says,
both during a short stay
Shanghai was able to personally observe the madness
in the China market. Chinese retail
investors account for 85% of the market, which is very
far from the US, where retail investors
own less than 30% of the shares and the transaction is less than 2% of the trading volume on the
NYSE. In combination with the highest frequency of
Trading in the world and one of the lowest
levels of education, describe the market
China as "immature" - a clear
understatement. Many people say that
"Mentally irrational" investors
- that the reason for such bad behavior №1
market.

Zhang had time to communicate
with some members of the Chinese market
- both in Shanghai and in other places, and
made a few comments about how
these people think and how they act.

Bubbles can be
surprisingly predictable

On the eve of and during the
the housing bubble was not possible
predict and diagnose such
bubbles, but then the analysts said,
These bubbles are often characterized by
several irrational behavior,
and the recent Chinese bubble is not
exception. Almost everyone in the financial
industry know that the Shanghai market
bubble. Interestingly, the investors
well aware that the market is overheated,
but they did not care when the bubble
burst.

The growth of bubbles in China
- not a new phenomenon

An interesting point to
awareness of the Chinese attitude toward bubbles
It is that they honestly admit,
that we are used to such races assets.
Maybe it's some kind of cultural
phenomenon or something else, but in the past
decade has been a constant in the country
"Resettlement" of investment from one
larger scheme to another, often located
beside. This property has been ten years
back then - gold, followed by -
securities. And this constant cycle
money to the rotation "hot" investments
preserved, even if each of these
paragraph investors failed to
eventually. Now, for instance,
they just turned to stocks. how
said one of the respondents, "Chinese
the market is not for investment, but for
gambling".

Managed before - caught more
gains

It is strange and
completely against most reasonable
standards, but the Chinese spit on standard
advice to "avoid the hot bubbles" and
massively jump in them. And because they
thus spoil the whole the weather in
market. Today, the Chinese real estate
- very poor investment asset but
Those who managed to grab a share before all
and get off in time, could double or even
triple their investments. Similarly with
securities - more people were
benefit from high interest payments
dividends than hurt. And although the market
in Shanghai and fell by 20% -30% from their peak
a few weeks ago, it is still
It represents a 100% increase over
from a year earlier and a 30% increase over the last
6 months.

Royal greed ...

Despite the fact that already
all recognized the existence of a bubble in the stock
China market, almost all still
"Sit" in the shares. Why? It's pretty
simple - greed with a tinge of jealousy.
Seeing constant gains in the news and
listening to everyday boasting of friends and family members,
getting good interest rates, it is
too tempting, too, to stay on
market, and therefore caution thrown to the back.

...and fear

The only emotion
more powerful than greed, is fear.
Almost everyone with whom the author says, still
were in stocks, but every one foot
She stood at the door, ready to run
at the first sign of trouble. That's because
we see the Chinese market, such
surges rising and falling. This
market falls almost always more violently,
than it originally grew.

The Chinese are sure they can always save the state

In the most chaotic
moments of the financial crisis begin
talk about "bailout" investors
and always these conversations bring moral
harm. While it does not play an important
role in the subsequent recovery
The US economy, the moral decline in China
quickly becomes a big problem. Many
Market participants said that they were
believe that the Chinese government
eventually intervene - support
order and prevent mass panic.
They know that the government's legitimacy
largely depends on the
economic progress, and are not afraid
this. While they were right - the government
announced an endless stream of measures over the past few weeks,
to stop the sale and panic
On the market. Of course, the question arises:
when the problem is too big
and even the government can not it
control - what will happen?