The Chinese mainland stock markets peaked just over a year ago on June 12, 2015. On that day, the benchmark Shanghai Composite Index reached an all-time high of 5,178.19 points, only to plunge 43 percent over the next 12 months. Although the central government has put a lot of effort into supporting domestic stocks, such as replacing the head of the country's securities regulator and injecting funds into the market, the effect has been limited. In the meantime, many investors who bought in during the frenzy now find themselves trapped in investments worth only a fraction of what they paid.
Down tens of millions of yuan, Chen Xiaojun still feels as if he has no other choice than to hold on to a stock investment he made a little more than a year ago.
Chen, who owns a culture company in Hangzhou, capital of East China's Zhejiang Province, sunk almost 80 million yuan ($12.15 million) into a new-energy auto stock when the Chinese mainland stock markets were hitting new highs in May 2015, the Zhejiang-based Qianjiang Evening News reported on Sunday.
He had been told the company would undergo asset restructuring, and the change would send the stock soaring.
The next month, when mainland stocks went into a tailspin, Chen felt his best option was to hold on to the stock and wait for it to recover, the newspaper reported.
But the rebound never came. The stock has since lost almost 80 percent of its value.
"I have lost more than 60 million yuan in the stock market," Chen told the Qianjiang Evening News.
The Chinese mainland stock markets peaked just over a year ago on June 12, 2015.
On that day, the benchmark Shanghai Composite Index reached an all-time high of 5,178.19 points, only to plunge 43 percent over the next 12 months.
During 2015, the domestic stock market has been plagued with volatility, with many stocks plummeting repeatedly by the exchange's 10 percent daily trading limit.
Investors who bought in during the frenzy, like Chen, now find themselves trapped, considering how sluggish the stock markets have been recently.
The index closed at 2,833.07 points on Monday, down 94.09 points from Friday, and down 2,251 points from its peak on June 12, 2015.
Experts pinned the stock market plunge on a number of factors: excessive speculation, weak supervision and misleading opinions, the Beijing-based China Times newspaper reported on Sunday.
Government intervention
When the mainland stock markets turned last summer, the fall was fast and far. The Shanghai index fell from 5,178 points on June 12, 2015 to 3,629 points on July 3, 2015.
At that point, the government, fearing the sell-off had gotten out of hand, stepped in to prop up stock prices.
On July 4, 2015, 21 of China's major securities brokers including CITIC Securities, Haitong Securities and Guotai Junan Securities announced they would invest 120 billion yuan in exchange-traded funds that track mainland blue chips, effectively investing in those stocks themselves, the Xinhua News Agency reported.
The firms also vowed to hold onto their investments - and even buy more - until the Shanghai index bounced back above 4,500 points.
The central government also got directly involved, instructing State-owned companies to purchase stocks to prop up the market.
U.S. investment bank Goldman Sachs estimated that the government spent 1.5 trillion yuan to support the market in July and August in 2015, according to a report by the Financial Times in November 2015.
The Shanghai and Shenzhen stock exchanges announced in July 2015 they would both reduce stock transaction fees. Meanwhile, the China Securities Regulatory Commission (CSRC), the country's securities regulator, said it would investigate suspected market manipulation.
The efforts worked, but only for a while. The CSRC announced in August 2015 that China Securities Finance Corp, the company in charge of injecting government funds, and Central Huijin Investment, a subsidiary of China's sovereign wealth fund, would stop large-scale stock purchases.
Then, on July 27, 2015, the Shanghai index plummeted 8.5 percent, the largest single-day decline in more than eight years, Xinhua reported.
The index slumped 14.3 percent that month, largest single-month decline since 2009.
In February 2016, China's State Council replaced CSRC Chairman Xiao Gang with Liu Shiyu, the former chairman of Agricultural Bank of China, Xinhua reported that same month.
Some investors were psyched about the new appointment, figuring that a new head of the securities regulator might bring stocks out of their funk.
However, most investors knew that a single personnel change alone couldn't solve the problems plaguing the mainland stock markets.
Since the establishment of the CSRC in 1992, the securities watchdog has had eight chairmen, including Liu.
Problems remain
There are still plenty of factors that could cause mainland stocks to fall further. The U.S. Federal Reserve could raise interest rates sooner than the markets have expected.
U.S.-based MSCI Inc could again postpone including mainland shares in some of its popular stock indexes.
However, James Gorman, chairman and CEO of investment bank Morgan Stanley Inc, explained the importance of liquidity when facing an economic crisis, according to a report by the China Times.
A lack of liquidity will cause investors to panic during a downturn, leading to more problems, Gorman said.
If individual or institutional investors, or regulators, all could consider whether they have sufficient funds, instead of only focusing on the rise and fall of individual stocks, it's possible for the market to avoid another crash, according to the report.
Individual investors need to think about whether they have enough money to invest, and the regulators need to care about the liquidity of the entire market, the report noted.
CSRC Vice Chairman Jiang Yang said on Sunday in Shanghai that regulators will continue to strengthen supervision over the market, including the de-listing rules, so the capital market can better serve the real economy, Xinhua reported on Sunday.
