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Rebound doesn't quell market jitters

By Zhou Yan (China Daily)
Updated: 2008-04-25 09:23

Retired worker Huang Wenfang hadn't tasted meat in three months as she mourned the downturn of the Chinese stock market, in which she had invested most of her life savings.

But like millions of relieved punters, the 56-year-old saw a ray of hope yesterday. On hearing that the benchmark index had jumped nearly 10 percent, she went to a nearby restaurant and gorged herself on braised pork-knuckle and boiled chicken.

"Finally, I found my appetite," Huang said. Although the market must recoup much more for her to recover all of her losses, she still smiled.

Huang invested 20,000 yuan (about $2,857) in the stock market during its peak last October, when the index soared above the 6000 mark. It had been nothing but heartache since, especially when the index plunged to nearly 3000 earlier this month.

Yesterday's rebound was hailed as good news by investors, some of whom could be seen on television setting off firecrackers in celebration.

However, some have remained somber. But many among this group agreed the government's latest measures would boost investor confidence. They had been most worried about the uncertain economic outlook, nagging inflation and the anticipated flood of unlocked shares in the domestic stock market.

Engineer Chi Guojin, who made an initial investment of 30,000 yuan in the stock market in July, said he didn't expect long-term prosperity when he made the investment.

"The stamp cut is definitely a positive step toward stabilizing the market," the 28-year-old said. However, he said he believed the government should limit its intervention, because it's better to let the market self-correct.

"I'm still in a dilemma as to whether or not I should sell off what I have or keep watching," Chi said. "I have to be careful with my every step."

Chi has put a total of 70,000 yuan of his wages from the five years he has worked in the market, but has lost 20,000 yuan to date.

"Who knows about the future?" he said.

The stock market's prolonged tribulations have sapped investor confidence to the point that many took little joy from yesterday's upswing.

At Taihe Securities on Shanghai's West Yan'an Road, a man surnamed Wang was still standing in the public gallery long after it closed and other investors had gone home.

"This couldn't have been the big turning point we were hoping for; it was too sudden and too easy," he said.

"The stamp tax cut shows the government's determination to boost the equities market, but I don't think it could have a long-term, positive impact," Wang said.

"I bet the market would undergo a strong rebound before the Olympics, and I will exit the stock market forever if I can make any gains then. It's just too risky for ordinary people like me."

Many experts agree with Wang's assessment.

Guotai Jun'an Securities analyst Zhai Peng said: "The sharp fall in share prices this year showed investors were dissatisfied with the current regulatory system.

"They are glad regulatory authorities have begun taking positive steps to ensure steady and healthy market growth."

Zhai said he believed the stamp tax cut would help restore investor confidence. But macroeconomic uncertainties still surround the stock market, and, "we should not feel too optimistic at this point in time".