In a global context, stock markets serve the functions of providing funding for startups, offering dividends to shareholders, and eliminating low-quality companies. Stock market trends also serve as an indicator of the economy’s direction. However, the A-share market in China is often referred to as a market driven by policies and speculation, consistently hovering around the 3000-point mark, leading to the vast majority of Chinese investors seeing their wealth depleted.
Upon graduating from university, Bu Qingsong, a former stock analyst in Shanghai, shared his story with Dajiyuan and delved into how the A-share market in China is headed towards collapse.
Bu Qingsong, in his forties, studied advertising at a university in Anhui, but his interest in economics led him to pursue a career in the securities industry.
Coming from a financially disadvantaged background in a rural area where even basic necessities were borrowed during his parents’ wedding banquets, Bu Qingsong always understood the importance of money for a family. This belief motivated him to directly engage with finances.
Given the high threshold to enter the banking sector at the time, Bu Qingsong opted to move to Shanghai after graduating in 2009 as the emerging securities industry posed fewer entry barriers and Shanghai stood as China’s financial hub. Bu Qingsong vividly recalled riding a second-hand bicycle from Hefei to Shanghai over four days, equipped with a t-shirt and a backpack.
Bu Qingsong had acquired all the necessary qualifications and directly sought employment with a securities company in Shanghai after his arrival. Starting at Guoxin Securities, one of the top three nationwide, he spent over a decade analyzing investments, primarily focusing on A-share market trends.
As a recent university graduate from a financially struggling family entering Shanghai, Bu Qingsong’s initial goal was simple – to make a mark in Shanghai; politics seemed distant. However, after over a decade in the financial sector, his perspective has dramatically evolved.
The Chinese stock market reached its peak in 2006 and 2007, hitting 6000 points before experiencing a drastic plummet. In 2015, the Chinese stock market also briefly surpassed the 6000-point mark before crashing, leading to the “2015 Stock Disaster.” Since then, the Chinese stock market has stagnated, hovering around the 3000-point mark.
Bu Qingsong viewed the events of 2015 as a significant turning point, believing that a breakthrough above 6000 points could have potentially helped China escape the middle-income trap – a hope that was proven unsuccessful.
Bu Qingsong admitted that the significant fluctuations in the stock market prior to 2015 did not deter his optimism, as he believed that since the stock market was relatively new, there was still hope for improvement. However, the developments post-2015 left him profoundly disappointed, mirroring the general disillusionment prevalent in society at the time. Despite claims of China being the world’s second-largest economy, the stock market remained stuck around the 3000-point mark, hinting at underlying issues beyond the stock market itself.
Orchestrating from his experience as an analyst, Bu Qingsong often contemplated why the A-share market consistently hovered around 3000 points, with 99% of individual investors and institutions alike facing losses.
He elaborated on four main reasons during his interview with Dajiyuan:
Firstly, he emphasized corruption, highlighting how funds were often siphoned off by regulatory bodies, effectively transferring wealth from primary to secondary markets, with the primary market under the control of the Party and the government. The process of obtaining approvals for listing in China involved granting a portion of original shares to these entities at nominal rates, leading to immense overvaluation upon listing, even for promising companies.
Furthermore, the listing of Chinese companies adheres to an approval-based system, with the Review Committee under the China Securities Regulatory Commission holding significant powers. Widespread corruption within the system was perceived to be systemic, with several past and even the current chair of the commission being implicated in corruption scandals. The officials within the Review Committee almost never escaped repercussions.
Bu Qingsong hinted at darker manipulations prevalent within the system, acknowledging the elusive nature of such practices that are often avoided out of fear or discretion.
Secondly, he pointed out that China’s stock market mechanisms were imperfect, allowing for insider trading opportunities. Individuals with power and influence could short stocks, but individual investors were vulnerable to severe losses, leading to a fundamentally uneven playing field. Over the years, numerous A-share companies witnessed deteriorating performance but failed to disclose such information. Upon regulatory scrutiny, these companies faced suspension or delisting, causing stock prices to plummet daily, leaving retail investors helpless as they incurred substantial losses. This narrative of institutional exploitation and loss within the stock market had been on a consistent rise.
In the years preceding, some retail investors attempted to collectively pursue legal action against listed companies, only to witness their efforts fade away in the face of apparent stonewalling.
Thirdly, Bu Qingsong highlighted the rampant issuance of new shares, emphasizing that while the number of A-share listed companies stood at 1000-2000 in the past, it had burgeoned to over 6000 companies in recent years. Such prolific listings were unparalleled globally, leading to incessant fundraising activities at the expense of market sustainability.
Lastly, he criticized the top-tier management’s view of the stock market as a speculative cash cow rather than an avenue for legitimate investment. The frequent policy changes geared towards stimulating certain sectors led to intermittent market surges, with the middle management and institutional investors primarily focusing on raising capital through listings to redirect funds elsewhere. This approach had essentially transformed the A-share market into a speculative playground, reflecting a prevalent state across all levels of the market.
In such an environment, Bu Qingsong noted a surge in suicide cases post the decline of a bull market, highlighting how investors often vent their frustrations through distressing social media posts or drastic actions such as jumping off buildings in despair.
Bu Qingsong recounted an incident during the bull market in 2015 when a fund manager, convinced by a person of influence, anticipated a surge to ten thousand points, only to suffer substantial losses. Eventually, overwhelmed by the financial turmoil, the manager tragically committed suicide in Yunnan.
Expressing pessimism towards the prospects of Hong Kong’s stock market, he predicted that the region’s integration into mainland policies had rendered it highly susceptible to similar dynamics as the A-share market. The gradual alignment in trajectories between the two markets indicated an inevitable exodus of compliant and transparent funds from Hong Kong in the future.
Reflecting on his over a decade of experience within Shanghai’s financial realm, Bu Qingsong discerned the underlying causes of chaos in China’s financial market as a manifestation of rent-seeking behavior entrenched within the power structures.
As the ephemeral financial bubble burst, it became evident that whether it was the speculative investors, corrupt officials, common investors, or traders, they were all victims of the Chinese Communist Party’s exploitative reign.
Bu Qingsong recounted how post the 2015 stock market crash, the subsequent years witnessed the rise of fraudulent schemes such as investments in precious metals, white silver, online fraud, P2P lending, and trust investments, all often intertwined with governmental affiliations. Operating under the guise of high-interest returns ranging between 15% to 18%, these schemes lured investors into substantial capital commitments, leading to catastrophic financial losses post-exposure. The scrutiny exposed various malpractices, resulting in severe consequences, including financial penalties and incarceration for some.
Bu Qingsong narrated accounts of close associates within the financial sector facing harsh consequences, with some enduring dreadful fates.
A friend in his twenties raked substantial profits through investments in precious metals and white silver, accumulating assets exceeding millions within a span of a year. However, amidst a governmental crackdown on erratic market behavior, his aspirations were cut short, leading to his arrest and subsequent sentencing.
Bu Qingsong underscored the direct confiscation of such profits by authorities, pointing out an instance where an individual amassed a significant following on a social media platform through stock market predictions but was eventually arrested, with his funds seized and extorted by the police before being released. These draconian measures highlighted the severe repercussions faced by those who inadvertently fell afoul of the system.
Another acquaintance within the financial sector ventured into a role as an investment mentor within a live broadcasting company specializing in precious metal investments, earning substantial monthly incomes peaking at hundreds of thousands. Nonetheless, his career was abruptly halted following a police raid just five months into his role, resulting in a three-year sentence under criminal charges.
Bu Qingsong reflected on his friend’s distress, particularly emphasizing the profound impact of these events during pivotal life moments like marriage and parenthood, leaving such individuals embroiled in irreversible turmoil. His personal contemplations of pursuing similar ventures coinciding with their downfall served as a stark reminder of the detrimental consequences lurking within the financial sector.
The prevalence of speculative investments in precious metals and white silver, predominantly orchestrated by local governments facing fiscal deficiencies, accentuated the manipulative tactics employed to siphon investments from unwitting investors. These dubious ploys often orchestrated under regulatory cover posed severe risks, eventually leading to catastrophic losses and consequential crackdowns that saw entire fortunes seized and misplaced.
The manipulative schemes weren’t limited to just one sector, as Bu Qingsong revealed similar tactics deployed within P2P lending and trust investments, all orchestrated to primarily benefit a select few at the expense of unaware investors.
The stringent clampdown by the Chinese Communist Party on the financial sector left affluent individuals with assets at the edge, with widespread nervousness infiltrating this privileged echelon within society. Instances of individuals swiftly remitting their assets overseas or discreetly contributing funds to the regime portrayed a sense of urgency to evade the looming financial crackdown.
As an experienced analyst proficient in economic analysis, Bu Qingsong’s sensitivity towards economic indicators heightened his perceptions of China’s gradual descent into economic distress.
Bu Qingsong observed a sharp decline in business prospects as reported by his entrepreneurial clients, with a stark transition in late 2023 and early 2024, marking a severe downturn where clients struggled to secure investments or potential opportunities for progress.
His reflections also noted a pronounced shift in payment behaviors among clients post-June 2024, demonstrating an abrupt tightening of financial transactions, indicating increasing financial strains within the economy.
Bu Qingsong noticed a considerable downturn in China’s economic landscape post-2020, with local governments experiencing budgetary strains by 2022. Desperate for capital injections, local governments resorted to expansive fishing expeditions for investments and cross-provincial crackdowns. The resultant financial constraints trickled down at all levels of society, fostering feelings of resentment and financial anxiety.
The wave of discontent reverberated through various sectors, ushering in an era of indiscriminate attacks and widespread societal malaise, witnessed through sporadic incidents of violent outbursts from 2023 to 2024.
Furthermore, Bu Qingsong critiqued the traditional model of economic stimulation pivoting heavily on infrastructure investments, all of which had ceased to sustain the flagging economy. With diminishing returns across all sectors and a debilitating financial outlook, the question arose as to whether leveraging the stock market, the only domain seemingly under control, could placate national woes – a move perceived as a last-ditch effort to alleviate economic burdens.
In contrast to the prevailing bullish sentiments that often dominate stock analysts’ forecasts, Bu Qingsong stood out with his contrarian views during the market peaks in 2016, 2020, and 2021, consistently predicting a market downturn to below 3000 points. His contrarian insights were validated by subsequent market movements.
Backed by a wealth of experience and expertise, Bu Qingsong garnered a substantial following on social media platforms like TikTok and Kwai, where he disseminated informed market analyses, often revealing the underlying trends with relative accuracy.
However, Bu Qingsong’s precise market evaluations conflicted with the Chinese Communist Party’s narrative of economic prosperity, resulting in his incarceration on charges of undermining the nation’s economic prospects, a stark revelation of the repressive undercurrents beneath the regime.
Venturing further into expressing his concerns about China’s trajectory, Bu Qingsong highlighted the systemic erosion of economic viability over the past decade, characterized by declining GDP growth rates from double to single digits intermittently under Xi Jinping’s administration. The gradual downturn in the real estate sector post-2022, coupled with the stock market’s instability, compounded the economic challenges, fostering an era of job scarcity, rampant industry insularity, and diminishing wage structures.
Given the trajectory of economic instability, Bu Qingsong provided insights into the State’s push to prop up the stock market on 24th September, an unprecedented move signaling a top-down intervention aimed at addressing the economic conundrum – an approach that defied conventional strategies to inject vitality into an ailing market.
Bu Qingsong analyzed Xi Jinping’s governance post-2012, pointing out the decade-long descent of China’s GDP growth rates into single digits. The real estate sector, which once propped up the economy, saw a downturn by 2022, aligned with the stock market’s decline, creating a confluence of financial woes and burgeoning discontent among the populace. The economic strain led to pervasive job scarcity, internal industry upheavals, and wage contractions, fostering an atmosphere brimming with societal disgruntlement, evident through the surge in indiscriminate violent incidents from 2023 to 2024.
Bu Qingsong further elucidated that previous economic stimuli predominantly hinged on foundational investments, a tactic rendered ineffective by the emerging financial crisis. In dire straits and with diminishing growth prospects across all sectors, the authorities found solace in the regulated environment of the stock market as a potential remedy to alleviate fiscal burdens, albeit viewed as a last-ditch salvation amidst economic turmoil.
While many analysts at the time predominantly harbored bullish sentiments towards the stock market, Bu Qingsong’s bearish stance during the peak periods of 2016, 2020, and 2021 offered unique insights. His forecasts of a market decline below 3000 points were validated over time, setting him apart in a realm dominated by optimistic prognoses.
Having incurred the State’s wrath for his critical analyses, Bu Qingsong faced a tumultuous ordeal including arrest and subsequent imprisonment, thereby reinforcing the oppressive clampdown on dissenting voices within the financial sector. These encounters underscored the inherent risks and repressive aura that pervaded the industry, prompting him to pivot towards independent media initiatives post his release.
Bu Qingsong eventually opted for self-exile overseas, driven by a sense of desolation coupled with a profound disillusionment with the prevalent ethos within the confines of his homeland. His reflections on the prevalent negative energies circulating within society, manifested in every-day confrontations and pent-up resentments, illuminated the somber reality of a society teetering on the brink of despair.
In confronting the oppressive environment and the looming repercussions of his dissenting viewpoints, Bu Qingsong’s journey underscored a profound shift from a realm of eagerness and financial aspiration to a realm fraught with despondency and hopelessness, prompting him to seek solace in distant horizons that shimmered with the promise of renewed hope.