Coronavirus outbreak meets 99.8% of Chinese retail investors

14 Feb, 2020 05:36
source: Singularity Financial

Coronavirus outbreak is putting the China’s market infrastructure to the test like never before, trading activity in China’s US$7.4 trillion stock market has soared since it reopened after the week long Lunar New Year break, with millions of amateur and professional investors placing bets from smartphones or home PCs, according to Bloomberg Quint.

One of China’s largest online retail brokerage firms NiuGuWang, told Singularity Financial that, in 2018, the total number of retail investors accounted for 99.8% of China’s total A-share market. Majority of the retail investors in China lack transparent information, lack proper financial knowledge and skills; they are impulsive, impatient, and not disciplined. Given the general unpredictability when it comes to the coronavirus epidemic, the worst thing Chinese retail investors can do right now is to panic and sell.  This online brokerage firm anticipates its robo-advisory platform will be largely benefiting from online training and financial services by bringing together strategists, listco executives, anxious investors, and fund managers, via live video streaming, via profiling recommendation, via wechat or blogs.

Kevin Craig, founder and CEO of communications agency PLMR, said history shows the markets will recover and that open and honest communication helps boost long-term confidence.

“And this is exactly what all businesses should be telling their investors. Fear drives both consumer and shareholder behaviour, so the most important thing is to communicate that there are robust plans in place to insulate businesses against these kinds of unexpected shocks, and that history shows that the markets will recover.”

“The virus doesn’t change long-term fundamentals of China’s market, just as the Pearl Harbor incident didn’t change U.S. economic strength,” said a former Wall Street trader, who set up a trading forum on China’s WeChat messaging platform that offers paid stock recommendation services to retail investors.

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