Chinese farmers hope to harvest bumper stock profits

Rural farmers chase China's stock rally
Rural farmers chase China's stock rally   

Farmers are eschewing crops to plough their cash into the booming stock market, a journey by CNBC into the heart of rural China discovered.

Six months ago, apple farmer Liu Jianguo invested $8,000 into the Shanghai Composite, a big chunk of his life savings.

"It's a lot easier to make money from stocks than farm work," he told CNBC's Eunice Yoon. "But it's risky, you can earn $1,600 in ten minutes, and lose it all in the next."

Liu is one of many residents in the village of Nanliu, located in the northern Shaanxi province, hoping to profit from a stellar stock rally that has seen the Shanghai Composite breach fresh seven-year highs.

Wang Li, grocer and 'stock market goddess' in Nanliu village.
Wang Li, grocer and 'stock market goddess' in Nanliu village.

The rapid gains have sparked concerns of a bubble among the investor community but amateurs like Liu remain bullish for now.

"I've made some small profit and gained experience but I still feel anxious when my investments aren't doing well," he said.

The villagers first started investing their savings in stocks after hearing about the market craze on a visit to a nearby town. As the excitement spread, a small informal stock market center was set up in the village where residents could monitor their investments by the minute.

Aside from tracking market updates with computers, the savvy villagers are also using their smartphones.

The farmers now only tend their fields outside of market hours, Liu noted.

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Wang Li, an unassuming grocer, invested $820 back in 2010 and soon earned the nickname 'stock market goddess' after her portfolio topped $33,000 - around 40 times her initial investment. Some of the companies in her portfolio include big-ticket names like Bank of China.

She advises investment novices to monitor the country's economic development and government policies closely, as well as reading the news.

The investment craze in Chinese rural areas comes as more retail investors play a bigger role in the market, encouraged by the Shanghai Composite rally which has risen 110 percent since last November.

Moreover, the country's high degree of financial literacy is a key factor; China ranked first in the investment component of the MasterCard Financial Literary Index Report this April.

"China is just beginning to catch up. In the United States 50 percent of families are investing in stock markets [whereas] in China, it's less than 9 percent," said Uwe Parpart, MD and head of research at Reorient Financial Markets.

- CNBC's Nyshka Chandran contributed to this article.