Chinese Investors Calm in Spite of Market Plunge

China's swelling ranks of stock market investors -- from housewives to students -- took the market's second biggest plunge this decade in their stride on Wednesday, with many vowing not to pull out despite the fall.

Individual investors, who have fuelled China's equities bull run, continued to open brokerage accounts in Shanghai despite a 6.5 percent fall by The Shanghai Composite Index on Wednesday.

The market fell after the Ministry of Finance tripled the stock trading tax in an effort to cool rampant speculation that pushed the index up 62 percent this year.

But in the public trading halls of Shanghai brokerages, the mood was generally calm -- suggesting individual investors, who account for up to 80 percent of turnover, were unlikely to stage a mass exodus that could trigger a bear market.

"I realize the risks clearly," said Xiao Liu, a 29-year-old medical equipment saleswoman, as she queued with ten other people to open an account at a Shanghai Securities branch in the city's financial district.

Liu said the lesson of Wednesday's plunge was that she should invest in blue chips to hold them for months or even years, instead of trading small, speculative stocks.

But even as the index tumbled, Liu said she would enter the market by investing 20,000 to 30,000 yuan ($2,620 to $3,925) -- half a year's salary for many Chinese.

"After all, investing in stocks is still the wise choice," Liu said.

The market's 10 percent leap to fresh all-time highs this month was largely due to the entrance of millions of new individual investors, who have been opening over 300,000 investment accounts daily.

The number of accounts hit 100 million this week. Though the number of individual investors is smaller -- some have multiple accounts, and many accounts are disused -- the rise represents one of the fastest shifts into stocks in the history of markets.

In the online chat rooms used by individual investors, many expressed anger at the government's action on Wednesday -- particularly because government officials had just a week ago denied rumours that the trading tax would be raised.

"They just denied it and then quickly announced the increase -- they are treating stock investors as monkeys. Where is the government's credibility?" read a typical posting on

An anonymous text message circulated among mobile phones called on investors to demonstrate against the tax in downtown Shanghai -- a protest that appeared unlikely to take place given the government's strict control over political activity.

But in the brokerage halls where housewives, retirees and students place stock orders and trade tips, many said they believed the government was cracking down on big speculators and share manipulators -- not punishing ordinary investors.

Some said they had made enough money during the 18-month bull run for Wednesday's losses to be bearable.

"This is a black day but we are veterans -- we have experienced bearish times which made us stronger," said a retiree in her 50s who invested about 150,000 yuan in stocks last year.

"We bought at very low prices and the shares we hold have at least doubled. So we will not hurry to sell -- the bull run is not over yet."

For others, the market's fall was a chance to buy.

"I thought it should be the right timing to open my account during a plunge, but to my surprise, I still have to queue," said Xiao Gu, who had come in from a small town outside Shanghai.

"My colleagues and relatives have all begun the stock journey -- I just hope I don't fall behind."