Dear Mr Shang Fulin,
I expect you, as chairman of the China Securities Regulatory Commission and Party secretary, have seen China's stock market falling sharply these days, with a majority of investors suffering huge losses. After suffering sleepless nights, I, an ordinary investor, want to share my thoughts with you.
As a Chinese stock investor, I understand that making money in the market is not easy, and of course, that doesn't just apply to Chinese markets but to any market around the world. However, I believe that for Chinese investors, it is especially difficult. China's incredibly rapid economic development since the 70s has been apparent. We surpassed Japan and wanted to catch up with the United States . But as for the markets, our supposed economic barometer, I believe that even the slightest sign of trouble may lead to collapse. The majority of stock investors are suffering major losses every day.
We all know that stock markets rise and fall. However, when the mainland's markets dive, those plunges are heavily influenced by human factors, including your own commission's misconduct on certain administrative measures.
In the current Chinese stock market, new listings have gotten out of control, and the number of listings falling below the initial public offering price has been atrocious. In fact, everyone understands that IPOs are simply making the market a blood bank for those listed firms, with shareholders doing the bleeding. Perhaps you do not believe this, but I invite you to ask any ordinary stock investor what the real situation is. Issuing new listings is perfectly fine, however, assessing the situation correctly and knowing the right timing are critical.
Now, at a time when the Chinese market is so fragile, frequent new listings are not a sensible option. The reasons for this have already been thoroughly discussed by many analysts. However, we've yet to see any reaction from your commission. I hope you realize that to keep China's stock market from further collapsing and investors from continuing to suffer heavy losses, IPOs must come to an end.
I don't mean to offend you with my words, but evaluating China's stock market situation is critical. Earlier this year, Goldman Sachs triggered a plunge in the A-share markets by simply sharing an e-mail to clients that they should sell all Chinese shares. Why? How can a foreign institution so easily manipulate the Chinese stock market? The answer is simple: Extreme lack of integrity within the market has led to deep distrust among investors. The Chinese stock market has never been one of value investing, but rather is a speculative market.
Today's A-share market has an atmosphere of paranoia, seemingly always on the verge of collapse. High inflation, monetary tightening, the performance of listed firms declining, external market instability, underperforming IPOs, listed firms' lack of corporate ethics and poor management supervision are all equally to blame.
In the past, we've always said that Chinese stock market is simply too young, too inexperienced. However, it has now been more than 20 years, certainly it is no longer an infant. The market has always been faltering and precarious, with its primary function not being to provide quality investments for the masses, but to give listed firms an avenue to capital through unverified and unstable investments. This trend has been going on for more than 20 years.
Chinese investors are the world's most pitiable. Their long-term holdings and their dividends are smaller than the bank interest rate. Some companies don't even pay dividends or other bonuses. Chinese investors lost an average of 40,000 yuan last year, while over the same period, the A-share market made firms 1 trillion yuan richer.
It's not that investors cannot lose money or that stocks can't drop. But the current situation has become ludicrous.
We are a socialist society, with a market that's supposed to be people-oriented. President Hu and Premier Wen have repeatedly stated that in order to increase public property income, China's stock market must grow and the Chinese should reap the benefits.
I urge you to follow the advice of the president and premier and build up, manage and protect the public's investment in our socialist market. I hope that China's stock market can become the nation's economic barometer and help increase the people's property income, instead of just functioning as a tool for listed firms to abuse for growth.
At the same time, I hope that you will be open to influence from a capitalist market. I hope that you will carefully consider your decisions, and promote equity and togetherness. I believe that on the matter of the stock market, your work is far from done.
Maybe you're just playing a long game of chess, with our investments meaning nothing. The problem is, with every market plunge, we are moving backwards and many of us can't afford it, even if you can.
Sincerely,
An ordinary stock investor
