China’s stock market roller-coaster has been especially steep this week, with the Shanghai Composite Index entering bear market territory, then falling 5% on Tuesday only to rise more than that before they closed. Already today, we’ve seen more of the same in Shanghai.
What’s behind the high volatility? China’s amateur stock investors have some ideas.
Despite the Chinese government’s ban on passing along rumors on the internet, several anonymous or unsourced posts on Sina Weibo, the popular microblogging site, point figures at one country—the US.
One blogger posted what he said his “securities trader friend” told him on June 29—foreign investors, and particularly ones from the US, shorted Chinese stock markets on the very day that the new China-led development bank, AIIB, was launched in order to hurt China’s confidence.
Another unnamed post that spread quickly on social media on this week blames a US investment bank for the drop, saying it invested tens of billions of yuan through a Hong Kong-based fund to sell the Shanghai Composite Index futures short. “The enemies are obvious. Capitalism never gives up on trying to defeat us. An international financial battle is coming,” the post reads.
The Chinese government and big state-owned institutional investors, who have been supporting markets, are being held up as national heroes online, and China’s small-time investors have dubbed them the “national team.”
One cartoon being quickly passed along online in China shows the Chinese Red Army liberating a woman villager and her daughter. The soldiers are tagged with the names of China’s big public funds and institutions, as well as investment banks Central Huijin and CICC:
“Finally, we get you back!” the woman in the cartoon says to the soldiers. “Those foreign devils really f-cked the folks up when you were not around.”
No one knows for sure if these posts were made by independent individuals, or by the so-called 50 cent party—internet commentators that are hired by the government. In any case, not everyone is buying them. “Investing fully in stocks is being patriotic,” reads one sarcastic post. “Let’s go!”
And one blogger wrote: “Not only the stock culture, but our culture as a whole is like this: As long as something bad happens to us, its a conspiracy of the American Empire.”