Stars make huge profits from stock market increase

Chinese actress and director Zhao Wei (Vicki Zhao) is pictured during a press conference for the new movie, To Our Youth That Is Fading Away, in Beijing, China, Feb 27,?2012. [Photo/IC]

Celebrities are among those making massive profits from the frenzied trading on China's stock exchanges that has seen share prices soar in recent months.

Actress Zhao Wei, nicknamed "China's show business Buffett" by the media, has gained 470 million yuan ($76.1 million) in less than six months from an investment in Hong Kong-listed Alibaba Pictures Group, an entertainment company backed by e-commerce giant Alibaba, according to a Hong Kong exchange filing.

The 39-year-old and her tycoon husband, Huang Youlong, bought a 9.2 percent stake in the company for 2.48 billion yuan at an average price of 1.3 yuan per share in December.

This proved to be a smart move, as the value of the stock has more than doubled－shares were trading at 2.71 yuan on Monday.

According to media estimates based on public information, the total value of Zhao and her husband's stock holdings exceeds 4.55 billion yuan, including a book profit of about 2.4 billion yuan.

The benchmark stock indexes on the mainland and in Hong Kong have soared to seven-year highs in recent weeks.

However, while stars such as Zhao are making huge fortunes from the bull market, others have seen their investments turn sour due to the increasing uncertainties and risks in the market.

Actress Sun Li, who played the lead role in the hit TV drama The Legend of Zhenhuan, has seen her investment in Hairun TV become locked in as the film production company's application for an initial public offering through a reverse merger was recently denied by the securities regulator.

Sun is not alone, as the regulator has denied IPO applications from a string of companies backed by celebrities, including talk show hosts Chen Luyu and Zhou Libo.

Some observers say firms use the fame of celebrity backers to attract investors and boost sales.

"If my favorite singer or actor owns shares in a listed company, I will definitely buy the stock of the company to support him," said He Ziying, a 31-year-old stock market investor in Beijing.

But she said average investors cannot learn much from the successful investment stories of celebrities.

"It is easy for them to make profits because they have a lot of money and they have a wide circle of contacts that feed them information and approach them with investment opportunities," He said.