Chinese farmer invested life savings in stocks, lost it all

Investors throughout China are waiting for the government to step in and buy more stocks so they can close out their positions, but many are losing hope.
Yang Cheng, a farmer in the remote town of Panzhihua in southwest China, was one of many Chinese citizens who started buying up stocks after the government began promoting equity investment as part of a larger plan to expand the country's economy.

"When the market climbed to 4,000 points, I realized the risks were pretty high. However, public opinion on government policies affected my judgment," he told CNBC.

Read More The real casualties of China's market meltdown
But after sinking his entire life savings—$164,000—and his relatives' money into shares of a local mining company, he lost everything. Not only that, but Yang's brokerage convinced him to borrow more than $1 million to buy stocks on margin. He now owes roughly what he originally invested after liquidating his portfolio.

Like many Chinese, Yang traveled to the office of the leadership and stock market regulator in Beijing to seek help, but was turned away.

"I don't know what to do. I trusted the government too much. I won't touch stocks again," Yang said.

The China Securities Regulatory Commission said late Monday that the government will increase purchases of stocks in an effort to support the equity market, while the central bank injected cash into money markets and hinted at further monetary easing.
—CNBC's Eunice Yoon reported this story from China.

http://www.cnbc.com/2015/07/28/chinese-farmer-invested-life-savings-in-stocks-lost-it-all.html

"When the market climbed to 4,000 points, I realized the risks were pretty high. However, public opinion on government policies affected my judgment," he told CNBC.

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Being overly trusting of public opinion and government's propaganda has this effect on people.

laksaboy said:

Being overly trusting of public opinion and government's propaganda has this effect on people.

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i smell a rat, they are being forced to cut loss at the bottom, surely maximum loss.

no problem for the farmer... any day sunny or not, he can always opt to sell a kidney to buy iphone7. unlike in sinkieland, he will be forced to exercised under hot sun to pick cardboards for exercise and send his organs for free without a trade in for iphone 3.

virus said:

no problem for the farmer... any day sunny or not, he can always opt to sell a kidney to buy iphone7. unlike in sinkieland, he will be forced to exercised under hot sun to pick cardboards for exercise and send his organs for free without a trade in for iphone 3.

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the difference this time is that most of the losers are elderly and retired with their life savings vaporized into thin air. even if they donate their kidneys nobody wants as old organs are only good for the dumpster. the prc gov is lucky that many of them commit suicide quietly literally killing two birds with one stone: no mass protest plus sit-in hunger strike in beijing and shanghai and fewer aging retirees to take care of. in one fell sweep, they wipe out not only $4 trillion in wealth but also 2 generations of hard-working honest blue collar and peasant savers who are nearing retirement and those who have already retired with meager savings. the aging problem in prc is solved in a macabre way. and it's not a stretch to suggest that a coup is in the works.

how does the chinese farmer even have money to invest in the stock market anyway,

Anyway no worries.China P/E 10 ratio is only about 20,about the same as US.US stock market has risen nearly 220% since the bottom of the 2008 stock market crash.their P/E ratio is now currently hovering at around 21,67% above the average mean over the last 100 years.

http://www.gbm.scotiabank.com/English/bns_econ/cmsr150409.pdf

China’s Equity Market Is Not A Bubble —Yet

Whether or not China is in a stock market bubble that is at risk of popping clearly matters to the world economy
given mainland China’s market capitalization of almost US$7 trillion and a 10% share of global stock markets. It
could impair Chinese and thus global growth, risk financial instability, and further damage the commodities
complex while eroding China’s external financial strengths.
Such risks clearly bear monitoring in light of the nearly 100% rise in the Shanghai and Shenzhen equity
composites since last June. However, at this juncture we view the rapid rise of China’s equity market as a
positive development on balance. While constant monitoring is required and volatility should be expected, the
rapid rise since last summer takes Chinese stocks from being among the cheapest and most neglected asset
class in the world to now being closer to fair value in a process that is being aided by long-awaited regulatory
reforms via financial liberalization and concomitant knock-on effects that have brought equity valuations more in
line with underlying fundamentals. We therefore think that risks to financial stability in China and abroad
stemming from domestic equity market developments are overstated and remain manageable in the context of
China’s still-sparkling measures of external country finances.
This article first presents multiple equity valuation metrics given that no single metric should ever be fully relied
upon while assessing the attractiveness of an asset class. Then we explain how regulatory changes have
changed the nature of the game in ways that have unlocked value in Chinese companies. Following that, we
argue that the rise of new account openings and margin debt are overstated influences in the equity rally.
Finally, we attempt to put stock market developments in the bigger picture context of the country’s finances. At
the end of the day, large Chinese foreign reserves offer a big safety buffer against potential domestic financial
imbalances in contrast to other countries with inflated stock markets alongside fewer reserves and more external
debt. The more recent small declines in Chinese foreign reserves are something to celebrate rather than malign.
Valuations: From Cheap To Fair
While it’s true that the levels of the Shanghai and Shenzhen equity
composites stand at their highest since early 2008, this serves as scant
evidence of a bubble even ignoring the fact that the Shanghai
composite remains 35% below the bubble peak in 2007. That’s because
in economics, price levels like stock market indices tell us little if
anything by themselves. Economics is about ratios and most variables
only carry meaning when expressed relative to something else — and
that something else also grows over time.
In the case of equity valuations, this can mean expressing stock values
relative to a variety of metrics. The price-to-trailing-earnings (P/E)
ratio for the Shanghai composite is shown in chart 1 over about the
past twenty years. Last summer’s reading of ten times earnings made
Chinese stocks rather cheap by comparison to a variety of other global
stock exchanges (chart 2). Today’s Shanghai price-earnings ratio has
come up quite a lot but remains below a long-run average and at or
below p/e ratios across exchanges in more mature and slower-growing
markets (chart 3). At presently 20 times earnings versus 70 times in
2007’s stock market bubble, it’s difficult to argue that valuations are
enormously stretched. That’s not true for the smaller Shenzhen equity

frenchbriefs said:

how does the chinese farmer even have money to invest in the stock market anyway,

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the clueless prc regime who think they are invincible turn the entire cuntry into a casino by allowing poor peasants to gamble with their meager savings in margin trading. adding fuel to fire, they encourage peasants to borrow more than 10 times their collateral and equity to join in the bubble thinking the bubble will never burst. how stupid! confidence in the current regime has plummeted, and they will not last long.

frenchbriefs said:

Anyway no worries.China P/E 10 ratio is only about 20,about the same as US.US stock market has risen nearly 220% since the bottom of the 2008 stock market crash.their P/E ratio is now currently hovering at around 21,67% above the average mean over the last 100 years.

http://www.gbm.scotiabank.com/English/bns_econ/cmsr150409.pdf

China’s Equity Market Is Not A Bubble —Yet

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that's the kind of crap report that the prc regime would like to be posted and propositioned for propaganda purposes. cannot always be compared to the u.s. as the u.s. stock market is truly and unequivocally in an unprecedented bubble. to say that the prc stock market is not yet in a bubble when compared to the u.s. stock market is being foolish, misleading, lacks local context, and an understatement. the two are so vastly different when all factors are accounted for.

eatshitndie said:

that's the kind of crap report that the prc regime would like to be posted and propositioned for propaganda purposes. cannot always be compared to the u.s. as the u.s. stock market is truly and unequivocally in an unprecedented bubble. to say that the prc stock market is not yet in a bubble when compared to the u.s. stock market is being foolish, misleading, lacks local context, and an understatement. the two are so vastly different when all factors are accounted for.

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but the thing is i like bubbles,so do others,US bubble,China Bubble,HDB Bubble,COE bubbles,SG economic bubbles.
it gives me alot of satisfaction.the world would be boring without bubbles.
Nothing goes up forever so

frenchbriefs said:

but the thing is i like bubbles,so do others,US bubble,China Bubble,HDB Bubble,COE bubbles,SG economic bubbles.
it gives me alot of satisfaction.the world would be boring without bubbles.
Nothing goes up forever so

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it's great nonetheless to see tiongs eat crow and humble pie again. they need to scale down their lofty global ambitions and retreat to their cesspit where elevators and escalators eat their own kind. the world does not need them to export their self-inflicted disasters: high speed rail trains collide and derail, buildings collapse, canals and dams break, food poisoning, gutter oil, fake degrees, etc. the sooner they go to hell the better.

should have invested in Temasick

Moral of the story: always invest in the stock market with money you can afford to lose. That's always been the advice given to me by my parents from Day 1, when I was a primary school kid.

frenchbriefs said:

but the thing is i like bubbles,so do others,US bubble,China Bubble,HDB Bubble,COE bubbles,SG economic bubbles.
it gives me alot of satisfaction.the world would be boring without bubbles.
Nothing goes up forever so

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i always have this thought about sinkieland, what if our muslim neighbour kee siao and turn to bomb us, we have no land and water, no escape route but to face the threat. besides, what is the fundamental of our overpriced currency? i have yet to find out.

Follow Ho Jinx and buy high sell low. Success guaranteed!

No one threaten or force him to buy stocks.

dancingshoes said:

i always have this thought about sinkieland, what if our muslim neighbour kee siao and turn to bomb us, we have no land and water, no escape route but to face the threat. besides, what is the fundamental of our overpriced currency? i have yet to find out.

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no land and water never mind,million dollar pigeon hole kena struck by mortar artillery fire or tank shell,gonna be very bad for resale value.sinkies gonna have to pick up pieces and rubble of their living room and sell it to the karang guni.with ssg bond value turn to dust and cpf money gone,sinkies will have to sleep in hdb bombed out shell with no walls and no doors.

frenchbriefs said:

no land and water never mind,million dollar pigeon hole kena struck by mortar artillery fire or tank shell,gonna be very bad for resale value.sinkies gonna have to pick up pieces and rubble of their living room and sell it to the karang guni.with ssg bond value turn to dust and cpf money gone,sinkies will have to sleep in hdb bombed out shell with no walls and no doors.

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that's why you see sinkie gahment building more and more underground tunnel and also fiddling with the idea of underground living space. the real reason is to eliminate this kind of threat rather than cope with population growth contributed by foreigners.

It's great to be able to make money from the arrogant and useless Tiongs' misery by shorting the Hantu index futures. If they prosper I go long, if they bust I go short. Win-win.