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BEIJING – Li Haitao, a 24-year-old employee at a steel trading company, did no research last June before he joined a stampede of novice investors into China's surging stock market.
He paid for his risk-taking.
"I went in blind," said Li, who works in the southern province of Hunan. "I already have suffered some losses, but luckily not much."
Many new investors piling into China's stock market, which has more than doubled in less than a year, are like Li: Rookies with little information whose enthusiasm for risky speculative trading is fueling rising concern they might be hurt when the boom cools.
"It's very common that investors do not even know what the companies in which they invest do. They do not care," said Zhang Chi, a securities analyst in Shanghai and former financial columnist for several newspapers. "I am worried about them."
In contrast to the United States, Europe or Japan, where many people invest through mutual funds, most Chinese investors buy stocks directly, sometimes in companies whose names they cannot remember.
Financial literacy is limited in a society where the mainland's first communist-era stock exchange opened in Shanghai only in 1990. Brokerages offer classes in trading but a culture of commentators who preach the gospel of low-risk, long-term investing has yet to develop. Many small investors rely on rumors or tips from friends in a market rife with complaints of insider trading and fraud. Reports say the China Household Finance Survey, which is conducted by Southwestern University of Finance and Economics, found nearly 6 percent of new investors were illiterate, a quarter finished only elementary school and more than third left the education system at junior high school level.
"I bought shares almost without basis, blindly," said a 54-year-old woman who would give only her surname, Huang, and was sitting at a desk in a room set aside by a Beijing brokerage for frequent traders. She said she has been investing since 2000 and is up 20 to 30 percent in the latest boom.
"It's unnecessary to learn too much about stocks," said Huang.
Why? Huang echoes a common sentiment in a heavily regulated economy in which stock prices are driven more by policy changes than by economic fundamentals: "The stock market in China is obviously manipulated by government, so if you are to make losses, it is fated and has nothing to with whether you know more or not."
The latest boom began after the state press said last summer stocks were cheap. Investors took that to mean Beijing wanted prices to rise — and might prop up markets if needed.
The benchmark Shanghai Composite Index has soared 150 percent over the past year, though it has suffered stomach-churning drops along the way, most recently a 6.5 percent plunge May 28.
The ruling Communist Party wants to develop China's stock markets as a tool to help make the state-dominated economy more efficient but its leaders appear to be getting uneasy the latest boom might run out of control.
State media have gradually begun to urge caution. But that comes after months of cheerleading for higher prices and encouraging the public to buy.
The party newspaper People's Daily in a May 4 commentary declared the latest boom a "profitable golden era." TV stations in Shanghai and other cities broadcast as many as three programs a day with commentators talking about the latest market moves.
"I believe all I need to do is watch news and commentary on TV, discuss it with my friends, look at the history of China's stock market and try to get a better idea of what the general landscape of China's economy is," said Huang Jingru, who at 80 is a 12-year veteran of the markets.
Each morning, armed with the day's financial newspapers and a mason jar of tea, she sits in a Beijing brokerage and hunts the latest stock tip.
"Today's paper highlighted heavy and military industries, so I'll pay more attention to stocks in these industries," said Huang.
Many of the new investors were born in the 1990s. That might make them too young to remember China's last market boom in 2007. It was followed by a price collapse that saw the benchmark index nose dive 70 percent over the following year.
In 2010, the state-owned China Securities Investor Protection Funds, which insures against possible losses due to fraud or a broker going bankrupt, produced an educational 40-episode TV series, "Uncle Niu's Story in the Stock Market." The story follows Uncle Niu, Chinese for "Bull," a play on the bull market, as he makes and loses money, highlighting principles of sensible investing.
New investors are often encouraged by stories of stock market-driven wealth gains for China's elite.
Boosted by surging asset prices, China created a new billionaire almost every week in the first quarter of this year, according to a survey by Swiss bank UBS.
Huang said she has doubled her money since late 2014 but acknowledged that after the 2007 bubble burst, she lost 70 percent of her investment.
"I didn't have much experience and knowledge about investment," she said.
Regulators have taken steps to try to insulate the state-owned financial industry from a possible downturn. In April, brokerages were told to rein in lending to investors to buy stocks in an apparent move to limit losses if speculators go bust.
The People's Daily commentary May 4 noted that few investors made money in past booms — an acknowledgement that the profits go to state-owned brokerages and other big traders. It called on the public to "invest rationally."
But those warnings are so mild that new investors are still piling into the markets.
Investors opened 2.6 million new trading accounts in the week ending May 22, according to the China Securities Depository and Clearing Co. That was down from a record 4.1 million accounts the week ending April 24 but still more than double the peak during the 2007 boom.
"I'm ready to invest in the stock market, mostly inspired by my friends," said a 60-year-old woman who was visiting a brokerage in Beijing and would give only her surname, Zhang.
"I have no plans or the energy to learn all the ABCs of investment," said Zhang as she watched share prices change on a wall-size monitor. "So, basically, I'll just look around and see whether this blind cat can catch a mouse."
AP researchers Fu Ting in Shanghai and Dong Tongjian in Beijing contributed.