“When I started the stock market was around 1,700,” he says, noting that today, despite the drop, the Shanghai composite index is still up at about 3,400. “I made a lot of money. So since the beginning of this year I decided to open a restaurant. I’d like to open a chain of famous restaurants in Shanghai.”
Shopkeepers, real estate brokers, even maids and watermelon hawkers are said to have become day traders.
A new version of the national anthem made its way around the country last year, beginning, “Arise! Ye who haven’t opened an account! Pour your gold and silver into the hot market!”
The anthem went on: “The Chinese nation faces its craziest time. The passionate roar of our peoples will be heard!”
People responded. Here in Shanghai, brokerage houses with giant electronic screens started to draw huge crowds, including many retirees who were content to spend the entire day transfixed by the sight of rising prices.
In some brokerage houses, entire floors are divided into small and midsize rooms that investors camp out in, from opening to closing bell, with their lunch bags, knitting gear, playing cards and newspapers to help them feel at home.
Only now, many investors cannot bear to look at their screens.
“I’m getting out of the game,” said Yuan Yuan, 23, a researcher at a fund company in Shenzhen who also invests on his own. “The game is over. Big institutions pulled out first, only leaving the small investors.”
In China, the government fears that angry investors can be a social problem. And so while the state-run media report on the ups and downs of the market, and even warn investors of the risks and pitfalls of investing, the press does not usually report on investors’ anger.
“Actually there are a lot of complaints, but the Chinese media can’t report this,” says Mr. Guan, the former real estate company owner.
Now, in the brokerage house corridors — corridors of pain — one can hear complaints about all the market flaws: the government doesn’t regulate the stock market and it participates in it by allowing mostly big state-owned companies to go public.
There are also complaints about insider trading, stock manipulation, and big investors with government connections, pumping and dumping stocks on small investors.
But in China, experts say, the small investor also tends to be a speculator, a gambler, and that may be why the market is so volatile, and so unforgiving.
“You know Warren Buffett?” says Chen Weihua, a 69-year-old retired engineer who once worked in Egypt. “He’s a master. He has a theory to hold stocks for a long time. But this theory doesn’t work in China. Look at Ping An.”
Ping An is a state-owned insurance company that went public last year, with shares that soared to $144 a share in Shanghai, then sank. Today, it is trading at about $50 a share, despite strong profit growth.
This was not the way it was supposed to end. Many investors had been betting that Beijing would not allow the stock market to crash before the Olympic Games come to Beijing in August.
After the Games, the powerful rumor went, everyone would sell, leading to a steep market plunge.
And if anything serious happened before the Olympics, the government would certainly do something to prop up the market.
They are still waiting.
“It’s a deformed market, an unhealthy market,” Mr. Guan says. “We’ve always had long bear markets and short bull markets.”
“Look,” he said, “it took two years to go from 1,000 to 6,000 but two months to go from 6,000 to 3,500.”