Liu Minxia

    mllmx@msn.com

    THE four-week-long stock market rout wiped 28 percent off China’s benchmark index, generating fears over consumer confidence, but a Shenzhen-based veteran stock trader thinks the plunge didn’t change the bullish trend of the market, though he warned individual investors of high risks due to the volatility that is foreseen in the market.

    Taiwanese Simon Ting, vice chairperson of Shenzhen Great Golden Sea Investment and Development Co. and a former investment manager at Goldman Sachs, has 48 years of experience in stock trading in countries such as the United States, Japan, Australia and China. He predicted the bull run in China’s stock market before it started in late 2014 and foresaw the crash before June.

    For this week, Ting expects the benchmark Shanghai Composite Index to drop to as low as 3,600 or even 3,400, which can be an opportunity for investors to buy stocks once the benchmark index drop below 3,700 as he expects the index to shoot beyond 4,500 in the near future.

    But Ting warned that Friday will be the stock index delivery day and the close of the Shanghai index will signal future trends.

    “Retail investors should always give priority to controlling risks and never put earning profits before controlling risks,” Ting told Shenzhen Daily reporters Friday.

    More than 99 percent of China’s more than 90 million stock investors are individuals, according to China Securities Depository and Clearing Co., and a large percentage of them were caught without an escape route as stocks slumped and half of the market was locked down.

    “Investors should remember that stopping losses is always the right thing to do,” Ting said. “Many investors trade stocks frequently in the hope of earning profits. Staying in a short position is also a strategy of stock trading.”

    Despite the recent stock market rout, Ting, who said he has earned a lot and lost a lot on stock markets across the globe, has strong confidence in China’s stock market as he experienced similar routs elsewhere in the world.

    “Thanks to economic reform efforts by the Taiwan authorities, Taiwan’s benchmark index skyrocketed by 20 times to 12,682 in February 1990 from 636 in July 1985,” Ting said. “There were three major slides during the process, but each time the index soared higher after the slide.”

    The longest crash during the process, according to Ting, was ignited by a government announcement Sept. 24, 1988 to levy capital gains tax, and the market tumbled by its daily limit for 19 days, resulting a more than 50 percent drop in the index.

    “The Shanghai index won’t drop below 3,400 again this year, as it touched last week,” Ting said. “It may even soar to 6,000, but at that time, a major correction won’t be far away.”

    Ting, who also has 38 years of experience in trading futures and 26 years of trading options experience, has his own ways of judging when to buy or sell a stock. He learned from several well-known Western traders and combines what he learned with traditional Chinese theories, including theories from “The Book of Changes,” to facilitate his stock trading.

    Ting, who will start an option fund once China launches options trading, advises individual investors not to borrow money to buy stocks, neither through opening margin trading accounts or borrowing from the gray market.

    China’s margin debt hit a record level of 2.27 trillion yuan (US$369 million) June 18, representing 8.5 percent of the Chinese stock market’s free float, compared with margin debt of less that 3 percent of the New York Stock Exchange free float. China’s margin debt reduced quickly during the market slide. But it stopped dropping Thursday when the market rebounded and even increased again Friday.