Recently, the Chinese stock market has been experiencing continuous fluctuations, with many investors pouring all their savings into the market. There has even been a surge in stock speculation with some individuals borrowing money to invest. Some have borrowed one hundred thousand yuan for stocks and ended up losing seven thousand yuan, while others have been caught by banks and had to scramble to raise money for repayment.
On October 17, the three main indexes of A-shares opened high but closed low. By the end of trading, the Shanghai Composite Index was reported at 3169 points, down by 1.05%; the Shenzhen Component Index was at 9891 points, down by 0.74%; and the ChiNext Index was at 2033 points, down by 0.32%. Nearly 3500 stocks in Shanghai, Shenzhen, and Beijing markets have experienced a decline.
Recently, the A-share market saw a rare surge before experiencing volatility starting on October 8. On the 9th, A-shares suffered a major setback with over 5000 individual stocks across the market falling, more than 3000 stocks dropping by over 9%, and stocks of 854 companies hitting the limit down.
According to reports from “Daily Economic News” and “Frontline News,” the topic of a bull market seems to have gradually faded from the trending discussions, and the enthusiasm for account openings has also cooled off due to the turbulence in the A-share market. In this current market situation, there is a considerable number of people borrowing money to invest in stocks.
However, those investors who borrowed money to enter the market are now facing financial turbulence. Some have borrowed one hundred thousand yuan for stocks and lost seven thousand yuan, while others who were flagged by banks have had to find various ways to raise money for repayment.
Zhang Lu, a post-2000 individual from Hefei, Anhui, opened an account during the National Day holiday after seeing the news of thousands of stocks hitting the daily limit on September 30. Due to insufficient capital, he applied for a credit loan of 100,000 yuan from the bank on October 7.
After entering the market, Zhang Lu only chose to invest in China Aluminum, buying at a high point, and losing 10,000 yuan in just one day on the 8th, followed by a loss of 6,000 yuan on the 9th.
“I bought and sold several stocks afterward, but the returns were not good. Now, I have run out of capital and lost 7,000 yuan,” Zhang Lu said. He is expected to repay 8,868.83 yuan by October 25, followed by nearly 9000 yuan in subsequent installments. Currently, his debt has reached around 115,000 yuan, and he has not yet informed his family about borrowing money for stock trading.
Li Gang, living in Wenzhou, Zhejiang, applied for a “lightning loan” from a bank. On October 8, the bank informed Li Gang that his credit line had been suspended due to suspected involvement in stock trading and demanded repayment. “I did transfer money into my stock trading account, which the bank found out about. But all my money is invested in the stock market, and I will suffer heavy losses if I sell at a low point,” Li Gang said. Consequently, Li Gang had to find other ways to raise funds for repayment.
Investigations have shown that individuals like Li Gang and Zhang Lu are not alone in their predicament, with many people compiling “experience posts” on how to bypass bank inspections and secure funds for stock trading without being detected. However, this trend has caught the attention of authorities.
According to a report from “21st Century Economic Herald,” on October 8, the People’s Bank of China, as reported by the official media “Financial Times,” financial regulatory authorities have provided guidance to commercial banks, strictly prohibiting loan funds from illegally entering the stock market.
The report mentioned that in response to the recent surge in stock trading volume, some banks have held internal meetings to coordinate actions such as interbank transfers, mutual fund applications, and redemptions. A retail banking source from the bank revealed that more than 35% of the 4 billion yuan lost in deposits in a single day had flowed into the stock market.