Study Shows Chinese Investors Overexposed To Stocks

by Philip Morton, Investors Offshore.com

17 April 2002

According to a report recently released by the Shenzhen Stock Exchange, unwary investors on the Chinese mainland are dangerously overexposed to stocks.

The study, one of the first in-depth surveys of individual stock market investors, polled over 2,500 individuals across the country, and concluded that many have put a sum equivalent to 23 times their average annual income into stock market investments.

'This phenomenon reduces investors' ability to bear market risks and hugely magnifies the potential social risks that can result from stock market fluctuations,' the SSE warned.

The study also showed that in addition to being overexposed to risky stocks, the majority of investors on the Chinese mainland are under-advised.

Alarmingly, around 43.81% of respondents were revealed to have a below secondary school education, and 78% of those polled said that they relied on newspapers, television reports, and stock commentators for advice on investments. Just over 78% told the Exchange that they intended to profit from stock trading, rather than from dividend payments.

Statistics released by the China Securities Regulatory Commission at the end of last year showed that more 66.5 million - mainly individual - investment accounts had been opened on the Chinese mainland.

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