A not-so-pleasant spring for Chinese investors

New figures showing dire conditions for Chinese investors so far this year have lit up the Internet. Some bloggers and forum posters have questioned the results as coming from a faulty barometer, while others have worried that China has been even worse hit by the financial crisis than the United States or Europe.

The benchmark Shanghai Composite Index logged one of the world's worst performances in the first quarter of 2012, with its increase of 2.88 percent dwarfed by Nasdaq's 18.67-percent gain and Tokyo's 19.26-percent surge, according to a report by the China Securities Journal on April 4.

From March 20-29, the Shanghai index lost over 6 percent, paring gains in the previous two months of this year.

The not-so-pleasant spring came after a bad year for Chinese investors, who each lost an average of over 40,000 yuan ($6,349.2) in 2011, according to a story by Shanghai Securities News in January. This was compared with a per-capita disposable income of 19,118 yuan for the country's urbanites.

Calling the market a "meat chopper," investors complained online that "the indices fall in a bearish market or a bullish market. The share price falls whether it's a promising company or a bad one."

Some bitter jokes even suggested the government relocate the country's two bourses in Shanghai and Shenzhen because their Chinese pronunciations, similar to "harm" and "deep tremors," are bad Fengshui.

"Tianjin [the northern port city near Beijing] is a good choice," as its Chinese pronunciation resembles 'adding gold,'" reads a widely-retweeted post on Sina Weibo, China's most popular Twitter-like micro-blogging service.

The Shanghai index declined 21.68 percent last year, the biggest annual fall since 2008 and the worst performance in Asia, despite a 9.2-percent GDP increase, one of the world's fastest growths.

The dichotomy has made people wonder why the country's relatively strong GDP numbers could not convince investors to put in more money here instead of in lackluster economies in the West.

However, Chinese officials do not agree. Zhuang Xinyi, vice-chairman of the China Securities Regulatory Commission (CSRC), said the country's stock markets are generally moving in line with national economic development.

"The market's only difference from a mature stock market is that it usually overreacts, with bad news leading to steep falls and good news causing strong gains," Zhuang said at the annual conference of the Boao Forum for Asia, which closed on April 3.

However, compared with the century-old Wall Street or London Stock Exchange, maturity is not the only quality missed on China's list.

Effective measures to restrain insider trading, a proper amount of IPOs, sufficient regulation and market mechanism improvement are all needed for the healthy development of the 22-years-young stock market, according to dealers.

Some pin their hope on CSRC chairman Guo Shuqing, who took the position last October during a reshuffle of several top financial officials.

Since Guo took the job, the CSRC has launched reforms including improving the delisting system for companies listed on the second board, requiring listed companies to pay dividends and working to eliminate illegal activities in stock markets.

In the latest move, the CSRC announced the government will more than double the amount foreigners can invest in equities and bonds. Boosted by the news, Chinese stocks rallied on Thursday, driving the Shanghai index to its biggest advance in two months.

The CSRC said Tuesday that the government will increase quotas for qualified foreign institutional investors to $80 billion from $30 billion.