Date
24 September 2017
Alibaba's September listing in New York triggered a frenzy for Chinese stocks. Now the e-commerce giant is down 17 percent from its November high. Photo: Bloomberg
Alibaba's September listing in New York triggered a frenzy for Chinese stocks. Now the e-commerce giant is down 17 percent from its November high. Photo: Bloomberg

Why Chinese stock investors are moving money home

Fast-trading Chinese investors are sending shares of Chinese companies soaring at home but stumbling overseas.

The declines abroad are leading some companies and investors to shift money back home after riding a rally in Chinese stocks in the United States, capped by the New York listing of of Alibaba Group Holding Ltd. in September, according to the Wall Street Journal.

Gang Hu, an entrepreneur in Shanghai, sold his business last year and invested in a dozen US-listed Chinese stocks such as social-media company YY Inc., Internet security provider Qihoo 360 Technology Co. and online beauty products retailer Jumei International Holding.

Hu’s holdings went up 20 percent through the summer but are now down 15 percent. He lost US$600,000 on Jumei alone, which is now trading 40 percent below the price of its May initial public offering.

Frustrated about losing his hard-earned wealth in the US market, he is shifting his money back home, opening a China stock market account in the belief the Shanghai market can keep rising after a 60 percent rally last year.

“There’s a lot of liquidity in China and the government is keen to revive the Chinese stock market,” Hu said.

“Some of my friends are saying the index can still double.”

That view is a turnabout for Chinese investors, who had been discouraged by real estate and trust product investments after a dismal five-year run.

Now they are pulling cash from these other investments, as well as overseas markets, to buy Chinese stocks at home.

Western interest in overseas Chinese stocks appeared to peak soon after the Alibaba IPO.

An index tracking 30 US-listed technology companies has fallen 12 percent since November. Internet security provider Qihoo has fallen 44 percent from its August peak and is now trading at the lowest level in 18 months. Even Alibaba is down 17 percent from its November high.

Eric He, chief financial officer of YY.com, a website for users to interact with performers or fellow gamers in real time online, blamed the Chinese stock market’s rebound for YY’s 30 percent fall since September.

“You see a big difference if you compare our trading volume in December versus a few months ago, and the trading volume on the Shanghai exchange,” He said.

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FL/RA

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