It was wet and gray outside the Shanghai brokerage branch, and just as gloomy inside, as the usual crowd of retirees and housewives stood glumly watching their investments dwindle Friday with each flash of the share-price boards.
“If I can make my money back from the market this time, I promised my wife that I will stay very far away from share trading,” said Gu Zichang, a woebegone looking man in his 50s, as the benchmark Shanghai Composite Index fell for the eighth straight session.
“My wife keeps scolding me, and I can understand how she feels, because I’m also depressed,” he said.
With Friday’s 3 percent decline to 2,868.80, the Shanghai benchmark index has lost 17 percent of its value since it began falling June 3.
The index, which attracted millions of new investors last year as it nearly doubled in value, is down 45 percent so far this year.
Chinese investors, their options limited by government regulations, jumped last year at the chance to make money quickly, shifting billions of dollars out of bank accounts paying only a fraction of a percent in interest to dabble in stock trading.
Many reaped quick fortunes. But many others are now seeing the windfalls evaporate.
“Why is this happening?” said a retired schoolteacher, who like some media-shy Chinese would give only her surname, Zhong. “I expected there to be a technical rebound, based on my past experience, so I used some money I’d saved for traveling to buy stocks last Friday. Now I’m trapped.
“I wish I’d just stayed away,” she said.
Until recently, the conventional wisdom was that the government would be loath to see the market flounder, especially ahead of the Beijing Olympic games, which begin Aug. 8.
Most of the shares traded on both the Shanghai exchange and the smaller bourse in Shenzhen are in state-owned companies, many of them elite, showcase conglomerates. The expectation has always been that the government would continue to indulge in its longtime habit of intervening to keep shares from falling too far.
Some, like Lin Yunzhe, a retired worker who describes himself as an “veteran individual investor,” still subscribe to that belief.
“Let’s see how the government moves to rescue the market. Remember, the Olympics are coming,” Mr. Lin said.
But many investors seem impatient with waiting for market-boosting measures.
Friday’s decline capped a week of losses that began Tuesday, after markets were closed Monday for a national holiday, with a 7.7 percent drop in the Shanghai Composite Index - its biggest one-day decline in more than a year.
That decline was triggered mainly by a central bank decision to boost the amount of deposits banks are required to keep on reserve, a move aimed at fighting inflation.
“It was my birthday the day the market dropped 7.7 percent. I was so upset,” said Mr. Gu.
The lack of any market-lifting news has weighed heavily on the market. The effects of an improvement in the inflation rate, which eased to 7.7 percent in May from 8.5 percent the month before, was absorbed early on, thanks to media reports leaking the data well before Thursday’s release by the National Bureau of Statistics.
“The market is just short of funds. Individual investors have panicked, and they’re busy selling,” said Zhang Xiuqi, an analyst at Guotai Jun’an Securities in Shanghai.
Foreigners are restricted in the amount of Chinese stocks they can buy - and mainland Chinese investors likewise are largely barred from buying foreign stocks.
Still, in a reflection of China’s increasing integration with the global economy, investors are increasingly worried about the effect of the U.S. economic slowdown on mainland companies’ profits.
Market heavyweights were hit Friday by concerns about the U.S. and over the potential effect of surging crude-oil prices.
Investors dumped shares in big Chinese refiners like PetroChina on worries that, with oil prices holding steady at about $136 a barrel, their profitability will be squeezed further owing to domestic controls on retail gasoline and other fuel prices.
PetroChina dropped 2.5 percent while major refiner China Petroleum & Chemical Corp., or Sinopec, declined 2.3 percent.
Property developers like Poly Real Estate Group, which rebounded Thursday after double-digit declines earlier in the week, fell back as investors cashed in on those gains.
Other big losers included some of China’s biggest corporate names: China Aluminum Corp., Industrial & Commercial Bank of China and China Eastern Airlines.
Given the markets’ doldrums, brokerages like Citic Securities have also suffered.
“So far, it’s hard to see any bottom to this market. I don’t see any signs of a rebound,” said Mr. Zhang, the analyst.
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