China Stocks, Once Frothy, Fall By Half In Six Mos

The sharp decline in Chinese stocks is approaching a milestone: With a 4% drop Friday, the market has fallen by nearly half since its peak last fall. The decline has wiped out nearly $2.5 trillion of wealth and is testing the government''s apparent resolve to let the market find equilibrium on its own.

The plunge has slashed the savings of millions of Chinese investors who jumped into the market as it rose six-fold in two years. It is crimping expansion in the country''s nascent financial sector and may put a squeeze in corporate coffers. But so far, it has not slowed the world''s fastest-growing major economy.

The benchmark Shanghai Composite Index has lost 49% since topping out, along with other global markets, last October. The slide was triggered by the global economic slowdown combined with the lofty valuations of Chinese stocks. It accelerated recently as investors became convinced the government would not intervene to stop the fall. The index finished Friday at 3094.67, down 4%.

While Chinese shares have been among the hardest-hit anywhere, some other emerging markets have also had a tough time, falling 6% so far this year after rising an average of 32% a year over the past five years. The other big loser is India, which was the other big winner over the past few years. The Mumbai Sensex Index is down 19% so far this year.

Arjun Divecha, an emerging-markets specialist who manages about $20 billion for GMO LLC, says that until recently, investors bought pricey stocks in both markets because these economies were seen as the fastest-growing. 'But with U.S. and global growth expectations slowing, it''s the markets that were bid up the most that are getting hurt the most now,' he said.

The Shanghai Composite posted a record close of 6092.06 on Oct. 16. The total value of all of the stocks on China''s two exchanges -- in Shanghai and Shenzhen -- peaked on Jan. 11, at about $4.9 trillion. The losses since then are equal to more than 70% of China''s 2007 gross domestic product. China can no longer boast that state-owned oil company PetroChina Co. is the world''s most valuable listed company.

Most U.S. investors are unlikely to feel much direct impact from China''s stock fall, because the shares traded in Shanghai and Shenzhen are off-limits to the vast majority of foreigners. While a few U.S. funds have received permission to invest in these stocks, 'it''s very speculative, and the quality of companies is not comparable to the Chinese companies listed in Hong Kong,' says Richard Gao, portfolio manager of the $1.5 billion Matthews China Fund in San Francisco.

However, some international funds are feeling pain because the plunge in Shanghai-listed shares has been matched by similarly steep declines in shares of Chinese companies listed in Hong Kong, New York and elsewhere. The iShares FTSE/Xinhua China 25 Index Fund, an exchange-traded fund listed on the New York Stock Exchange, is off by 33% from its peak last fall. The Matthews China Fund is off by 32% from its peak.

Both India and China have seen inflation fears worsen in recent weeks, which could force their governments to tap the brakes harder on economic growth. 'That would hurt corporate earnings,' says Mr. Divecha, the money manager.

Some emerging markets are holding their own. Russia''s stock market is off just 5% this year, while Brazil''s benchmark index has climbed 1.6%. Analysts say their better performance reflects cheaper stocks and the commodity boom. Russia and Brazil are big commodities exporters, although demand growth may slow along with slower economic growth in China and India.

The Shanghai Composite''s 34% drop in the first quarter was the worst ever for China''s stock market. The past week was its worst week in over a decade, with the Shanghai index down 11%.

Even so, China surprised analysts earlier in the week when it reported a 10.6% rise in GDP for the first quarter, bolstered by double-digit gains in retail sales and home prices that helped offset slowing exports.

For the economy, 'there''s no clear impact' from the stock market, says Gene Ma, president of China Economic & Business Monitor Group Ltd. in Beijing. He says the economy never got a boost from consumers spending their stock-market gains, so the downturn isn''t doing much to affect consumer behavior.

Investor psychology, however, has taken a big hit. Last August, Qiu Jiaxin, a 27-year-old school administrator, bought 100,000 yuan, or about $14,000, of Shanghai-listed Western Mining Co. after its stock more than doubled to about 60 yuan a share. Looking at the global resources boom, 'we thought it would go up again,' says Mr. Qiu.

It didn''t. The stock now trades at 20.85 yuan, and Mr. Qiu has delayed a home renovation and pushed plans for his wedding to 2009. The Shanghai resident isn''t selling just yet. 'It is not a small pool of money. It is a big loss to us,' he says. 'If we don''t sell, it is only a paper loss.'

China''s market turns on individual investors. Last year, they poured into stocks, driven by the belief that the country deserved a stock market as turbocharged as the economy itself. Now they have closed a third of the 58 million trading accounts opened in 2007. Internet postings have seethed with rage -- sometimes directed at the U.S. -- that small players are victims of China''s second boom-bust stock cycle in less than a decade.

Many are pressing for the kind of government intervention to prop up the market that often followed past downturns. Some investors have felt that the government wouldn''t stand by quietly if the stock market plunged in the same year that Beijing hosts the Olympic Games. Among those most affected are big government entities, which are the controlling shareholders in most listed companies.

China''s top government officials have scrupulously avoided direct comment amid the market meltdown. But some influential commentators are calling for restraint. 'Reality is cold and hard,' wrote Hu Shuli, the managing editor of influential financial magazine Caijing, in an April 1 editorial. The article argued that past efforts to save stocks 'resulted in a catalog of failures.' She said 'there is nothing in China''s ''unique national characteristics''' that gives regulators the right to meddle beyond their mandate to ensure market 'openness, equality and fairness.'

The Shanghai index has fallen further than the Dow Jones Industrial Average did when it lost 36% in two months around October 1987. The Nasdaq Composite Index lost 78% peak-to-trough starting in 2000.

The Shanghai Index fell 55% between June 2001 and July 2005 -- years when the economy averaged 9.5% expansion annually in GDP. The market was far smaller back then. The drop erased just $269 billion of capitalization, about a tenth of today''s rout. Government officials took dozens of small steps to placate angry investors, although none fundamentally changed the market''s downward course.

Some fund-raising plans are now in jeopardy, including a nearly $20 billion securities offering by Ping An Insurance (Group) Co. and the listing of several property companies.

The Shangahi index remains triple its level at the June 2005 trough, but the market no longer looks as out of sync with global values as it once did. The prices of class-A shares, mainly for domestic investors, of Chinese companies listed on domestic exchanges are now 40% more expensive on average than the same shares of those companies listed on the Hong Kong exchange called H shares. That''s down from a peak last August of 54%, according to ABN-Amro analysts.

A widely accepted measure of stock valuations, the price-earnings ratio, has fallen on the Shanghai market to 35 times announced income from a peak of about 70 times last year, though some say accounting remains opaque at many Chinese companies. Jake Lynch, head of China research at Macquarie Capital Securities in Shanghai, is bullish. With profits expected to rise nearly 20% this year, he says, 'as soon as sentiment does improve, you''re poised for a big rebound.'

Small investor Guan Jun plans to save $3,000 by taking this year''s holiday in China''s Yunnan Province instead of the Maldives. He bought China Petroleum & Chemical Corp. shares at 25 yuan, and they are now trading closer to 10.43 yuan. 'It should be a right time [to sell] when it rebounds,' he says.

James T. Areddy / Craig Karmin


>近来中国股市的大跌已令股指逼近一个重要关口：在上周五重挫4%之后市场已较去年秋
天所创峰值下滑了将近一半。如此跌势不仅使将近2.5万亿美元的财富蒸发不见，也在不断考验着政府让市场自己寻求平衡的决心。

股市暴跌还让上千万中国股民身家大幅缩水，他们在看到股市在过去两年中上涨了五倍后都积极置身于炒股洪流。此外，这也制约了中国年轻的金融市场的扩张，并可能给公司收益带来侵蚀。不过，迄今为止，股市的重挫还没有减缓中国这个全球增长最快的经济体的发展步伐。

中国基准上证综合指数去年10月和全球其他市场一道创下了历史高位，而今股指已经累计下滑了49%。全球经济放缓以及中国股市估值过高的局面共同造就了股指的颓势。随着投资者逐渐认识到政府不会入市阻止股指下滑，近期市场跌势有所加剧。上证综合指数上周五收盘下跌4%，至3094.67点。

在中国市场承受着最沉重打击的同时，其他新兴市场的日子也不好过，它们在过去五年中平均上涨了32%，而今年迄今就已回吐了6%的涨幅。在过去几年中经历了大涨的印度市场今年也没能逃脱大跌的厄运。今年截至目前，孟买敏感指数已累计下滑了19%。

为GMO LLC管理着约200亿美元资产的新兴市场专家阿让•迪瓦查(Arjun Divecha)表示，就在不久前，投资者还在中国和印度市场中积极买进那些价格昂贵的股票，因为他们认为这两个经济体发展之迅猛数一数二；但随着美国和全球经济增长前景放缓，曾经最受追捧的市场现在则在承受最为沉重的打击。

上证综合指数在去年10月16日创下了6092.06点的最高收盘纪录。上海和深圳证交所的总市值在1月11日时见顶，达到了约4.9亿美元。此后市值的损失已经超过了中国2007年国内生产总值(GDP)的70%。中国再也不能将国有的中国石油(Petrochina Co.)称为全球坐拥最大市值的上市企业了。

大多数美国投资者都没有从中国的股市暴跌中受到什么直接影响，因为大多数境外投资者都无法涉足上海和深圳的股票市场。旧金山Matthews China Fund的投资组合经理Richard Gao说，虽然有几家美国基金获准投资中国市场，但中国大陆股市存在高度的投机性，上市公司的质量和在香港市场上市的中资企业也无法相提并论。Gao替该基金管理着15亿美元资产。

不过，也有一些境外基金受到了拖累，因为在上海股市下跌的同时，中资企业在香港、纽约以及其他地方交易的股票也出现了同样猛烈的下挫。iShares FTSE/Xinhua China 25 Index Fund是一家在纽约证交所上市的场内交易基金，自去年秋天见顶以来，该基金已经累计下滑了33%，Matthews China Fund也从峰值下挫了32%。

近几周来印度和中国的通胀恐慌都有所升温，这或许会迫使两国政府加大给经济增长刹车的力度。迪瓦查预计这可能会影响到企业的收益状况。

但也有一些新兴市场表现坚挺。俄罗斯股市今年仅仅下滑了5%，巴西市场还上涨了1.6%。分析师表示，它们表现较好既是因为其市盈率较低，也是拜大宗商品价格高涨所赐。俄罗斯和巴西都大宗商品出口大国，尽管它们的经济增长或许会随着中、印经济减速而一道放缓。

上证综合指数在第一季度下跌了34%，为中国股市历史上的最差战绩。而过去一周上证综指下挫了11%，也是十年来中国股市表现最差的一周。

即便如此，中国在上周早些时候宣布，因零售额和住房价格所录得的两位增长抵消了出口放缓的影响，第一季度中国GDP增幅达到了10.6%，如此强劲的表现令分析师颇感意外。

北京莫尼塔(China Economic & Business Monitor Group)的总裁马青(Gene Ma)表示，中国经济尚未明显受到股市下跌的影响。他指出，中国经济从未因消费者消费其炒股收益而获得提振，因此股市走软也不会显著影响人们的消费行为。

不过，投资者的心理却受到了沉重打击。去年8月份，从事学校管理工作的丘嘉新（音）花人民币10万元（合1.4万美元）买进了西部矿业(Western Mining Co. Ltd.)的股票，当时这只在上海证交所上市的股票已上涨了一倍有余，达到每股人民币60元左右。丘嘉新那时想，在全球资源行业大热的背景下，该股将进一步走强。

但事与愿违。西部矿业现在已经跌至20.85元，丘嘉新推迟了房屋装修计划，还把自己的婚礼延期到了2009年。这位上海居民现在还没有割肉出仓的计划。他说，那不是一小笔钱，这对我们来说是很大的损失，只要我们不抛，那就只是纸面上的亏损。

散户投资者对中国股市至关重要。去年散户蜂拥入市，因为他们相信中国蓬勃发展的经济可以容纳一个与之相称的强劲股市。他们在2007年新开了5,800万个交易帐户，而今只剩下了三分之二。他们在网上的留言总是怒气冲冲，称自己是中国十年内第二次股市泡沫破裂的受害者，其中一些留言还把火气发向了美国。

许多人要求政府入市干预，就像以往股市下跌时那样力撑市场。一些投资者认为中国政府不可能在奥运年对股市暴跌袖手旁观。在那些跌幅最大的企业中有不少是政府旗下企业，中国政府在很多上市公司中都持有控股股权。

中国的高级官员一直在小心翼翼地避免对当前股市跌势直接发表什么评论。但一些重量级的评论员呼吁大家保持克制。《财经》杂志总编胡舒立在4月1日的文章中表示，现实是冷酷而艰难的，而过去的救市措施导致了一连串失败，政府应该做的是保证市场的公正、公平和公开，除此之外监管机构无权进行干预。

上证综合指数的跌幅要甚于道琼斯指数在1987年10月时的表现，后者在两个月的时间里下跌了36%。自2000年起，纳斯达克综合指数从波峰到波谷经历了78%的下跌。

上证综合指数在2001年6月至2005年7月间累计下挫了55%，其间中国的GDP年增幅平均达到9.5%。不过那时中国股市的规模要小得多，当时投资者仅损失了2,690亿美元，为现在十分之一左右。那时中国政府推出了数十项措施来安抚愤怒的投资者，不过这些规模不是很大的动作没有任何一项从根本上扭转了市场颓势。

眼下一些融资计划有泡汤的可能，其中就包括中国平安保险(集团)股份有限公司(Ping An Insurance (Group) Co.)的证券发行计划以及一些房地产企业的上市计划。

现在上证综合指数仍比2005年6月时的水平高两倍，但与从前不同的是中国股市似乎已变得和全球市场的估值状况更合拍了一些。荷兰银行(ABN AMRO Bank)分析师表示，目前主要面向内地投资者的A股平均较在香港交易的H股溢价40%，与去年秋天创纪录的54%相比已有所回落。

A股市盈率在去年秋天创下了约70倍的峰值后，目前已降至35倍。不过仍有一些人认为许多中资企业的财务状况不透明。Macquarie Capital Securities驻上海的中国市场研究负责人杰克•林奇(Jake Lynch)对中国股市前景持乐观态度。他指出，考虑到今年的企业收益有望增长约20%，只要市场人气出现改善，中国股市势必将展开大规模反弹。

一位名叫关军（音）的散户投资者把自己今年的度假目的地从马尔代夫改为中国云南省，这样一来他可以节省下来3,000美元。此前他以每股人民币25元的价格投资了中国石化(China Petroleum & Chemical Corp.)，现在该股已快要跌到10.43元了。关军表示，股票一出现反弹就是脱手的时候。

James T. Areddy / Craig Karmin