Why a Meme Compares China’s Flood of Retail Investors to a Pig at Slaughter · Global Voices
Jack Hu

A widely circulated picture explaining the relationship among different players in China's stock market.
It is like a casino, but without rules, where “one player can see other players’ cards.” That's how prominent Chinese economist Wu Jinglian described the nature of the Chinese stock market last year during a finance summit when the stock market began to surge.
The blue-chip Shanghai Composite has risen more than 100 percent year-on-year from about 2,000 to over 4,600 as to date, with similar gains for the small and medium enterprise Shenzhen Composite. But both markets has been outpaced by ChiNext, China’s Nasdaq, which have seen gains of over 150 percent year-on-year and boasts an average price-to-earnings ratio (the ratio of a company's current share price to its per-share earnings) of over 130, roughly five times that of the Nasdaq Composite Index.
The boom has been driven by easy credit, government encouragement for newcomers to invest and hopes that the world's second-largest economy would rebound from a deepening slump. That outlook has been clouded by weaker-than-expected economic growth and trade — yet markets kept rising.
With China’s central bank pumping more liquidity into the market to support growth, the rally in Chinese stocks has encouraged unscrupulous speculation, similar to that in the Chinese real estate markets.
The one player who can set the rules and see the others’ cards is, of course, the government. Newspaper The Wall Street Journal recently reported that the biggest winner has been the Chinese government; it generated billions out of the market to help state-owned companies to raise funds and pay off debt.
What happened to other players then? The image on top of this article has circulated online in the past few months and compares the government to a butcher, and the retail investors to a pig to be butchered. Financial agencies and big traders are the butcher's assistants, and some don't even have to get their hands dirty in the process.
More than 10 million new stock accounts have opened so far this year, more than the total number for all of 2012 and 2013 combined, according to data from China Securities Depository and Clearing. Many of these new players appear to be inexperienced retail investors, who are likely following the advice of friends or state-controlled media. About two-thirds of new equity investors left school before the age of 15, according to data from the China Household Finance Survey carried in a recent Bloomberg report.
After months of touting for rising prices, the Communist Party newspaper People's Daily posted a cautionary note this month, warning that stock trading is “high risk.” It said the public should “invest rationally.” Yet it can’t deter millions of retail investors from rushing into the market dreaming to win big and strike it rich.
On China's Twitter-like Weibo, there are many discussions about the frenzied behavior of individual investors. “Energetic Andy” compared their mindset to that of addicted gamblers:
在中国股市，既无法复制巴菲特的奇迹[…]在赌局游戏中，更需要做的是趁着赌局大旺，而后趁机捞一把。最后，当别人沉迷赌局，无法自拔的时候，全身而退
You can’t repeat the miracle of [American businessman] Warren Buffett on Chinese stocks […] In a gambling game, you have to choose a hot table with many players, which provides an opportunity for you to chip in. What’s more important here is to cash in on the boom of the gamble and quickly exit as others become addicted to it.
Liu Shengjun, a well-known and active economist on Weibo, urged the retail investors to leave the market:
【致创业板股民的一封信：不仅仅是泡沫】泡沫一旦破灭，大量低学历低收入人群将成最后接棒者。驱动因素则是“非理性亢奋＋财务造假”。监管者不应“目睹”疯牛走向更大的疯狂，直至“踩踏式悲剧”，而应在“聚会高潮时端走酒杯”
“A letter to ChiNext investors: This is not only a bubble”: Once the bubbles burst, a lot of people with low education and income at the bottom of society will bear the brunt. The drivers are “irrational excitement plus financial fraud”. The supervision authority should not stand by to see the crazy bull getting more crazy and running into the crowd. It should “take the alcohol away at the peak of the party”.
Economist Christopher Jin pointed out:
为何第四波牛市会走得更远？只有一个解释，这是纯粹投机性疯牛市，与基本面无关，PMI、GDP诸经济指标越差，股市越疯涨，赌客越多，只要巨资集聚就行，本月252万新股民汹涌入市，上周新增A股账户数为113.85万户，环比大增57.95%，不服也得服，从赌场原理来说，不要讲道理，紧跟大势走，不见棺材不掉泪。
Why is the fourth wave of a bull market going that far? Only one explanation: this is a pure speculative bull market and has nothing to do with the fundamentals like purchasing managers’ index or gross domestic product. The more the gamblers get together, capital accumulates. This month, 2.52 million new investors entered the market. Last week, there were more than 1.1385 million new investor accounts set up for trading A stock shares, an increase of 57.95% when compared with the last statistical period. According to casino logic, there is no rationality in the game, just follow the trend until you find yourself in the coffin.
As the stock market is driven by government economic policies such as the “New Silk Road Project” and “Internet+”, investors buy stock in companies that benefit from such policies. But they rarely look into the details of their businesses and could fall for scams. Wang Shi, the chairman of China’s largest real estate firm Vanke, mocked the tricks played by some companies in packaging their businesses:
创业版路线图：计划收购250个公共厕所，谋求上市。理由：处理大小便环保概念，检验大小便，医疗大健康，加个WIFI，互联网+，新疆，浙江收购几个，一带一路；装上自动门，工业4.0；门口坐两要饭的，P2P和众筹概念。男厕让出二位给女厕，是重大资产重组概念！有意向风投的，可以先点赞再联系。
Road to ChiNext: plan to acquire 250 public restrooms for initial public offering. Reasons: dealing with urination and defecation belongs to environmental protection concept. Testing urine and stool relates to heath care. Setting WiFi in the toilets involves “Internet+” policy [Chinese government's latest economic policy]. Buying some toilets in Xinjiang and Zhejiang involves “Belt and Road Initiatives” policy [China's new silk road project]. Installing auto doors for toilets relates to “Industry 4.0” conception. Arranging two beggars around the door refers to P2P and crowdfunding. Sparing two toilets from men’s rooms to women’s rooms relates to material assets reorganization. Those who tend to invest can contact with me after press ‘favorites’.