Foreign Policy Magazine’s Warner Brown signed up for an introductory class on stock trading taught by a firm named Homily Stone in Shanghai, and the experience offers some valuable perspective on the ongoing bull market and growing stock frenzy in China. His article was published on Tuesday, June 9th.
China’s bull market leading to a stock market craze
Financial analysts and pundits have been noting for some time that China’s economic fundamentals are weakening. This has led to pro-growth measures from the government such as reductions in interest rates and banks’ reserve ratio requirements, which has resulted in stock prices skyrocketing up to the 2008 all-time highs.
The benchmark Shanghai Composite Index has moved up from around 2,000 in mid-summer 2014 to more than 5,000 on Friday, June 5. Also of note as a sign of a bubble, openings of new stock trading accounts hit a record in the final week of May, and Chinese media reported a net increase of 1.6 million new investors in that one week alone. Not surprisingly, the huge number of new investors has caught the attention of stock marketers and stock market marketers throughout the country.
Homily Stone’s free stock trading tips class
Brown describes the scene as 500 students arrived at a Shanghai office tower to hear a lecture from Chen Haisheng, one of Homily Stone’s stock experts. There was an entry fee of $320, but the fee waivers that Li and other staff members gave to virtually everyone (including Brown) hinted at a future pitch.
All of the new students registered and found their seats in a conference room filled with posters showing cartoon bulls and bears, trend lines and slogans such as “Homily Stone: simple and straightforward, happy stock-trading.”
Brown highlighted that the large majority of the students seemed to be 50 or older.
After the two-hour stock trading basics class was over, the staff set off confetti bombs as a group of gray-haired students formed a line to sign up for the $490 software package and advanced afternoon class.
When Brown asked a staff member regarding the relatively advanced age of the audience, the employee replied, “Older folks tend to have more free time, and their level of trust tends to be higher.”