October 21, 2024 – Recently, China's stock market has experienced significant fluctuations. On the evening of October 20, 23 companies listed on the Shanghai and Shenzhen stock exchanges announced that they would use bank loans for stock buybacks or to increase shareholdings. A senior accountant in mainland China warned that this is a trap, suggesting that the Chinese Communist Party (CCP) is using the stock market to tap into citizens' savings to meet this year’s GDP growth target.

On the evening of October 20, 23 Shanghai and Shenzhen listed companies announced that they had signed loan agreements with banks, securing credit lines for stock buybacks and share increase plans. The 23 companies include Sinopec, China Merchants Shekou, Sinotrans, COSCO Shipping Energy, and COSCO Shipping Development, collectively applying for loans totaling nearly 11.5 billion yuan (RMB).

Sinopec, for instance, signed a credit agreement with the Bank of China, securing nearly 900 million yuan in loans for stock repurchases. China Merchants Shekou secured a 702 million yuan loan from China Merchants Bank to support stock buybacks.

That same day, Zheshang Securities in mainland China claimed that the stock market's downward trend since October 8 had ended, and the market was likely to stage a daily-level rebound after the decline near the 3,674-point mark.

Analysis: China's Stock Market Volatility Is Manipulated by the CCP

However, mainland senior accountant Ms. Yu expressed skepticism about the notion of a "bull market" and warned that there is a trap behind this development.

On October 21, Ms. Yu told Epoch Times that the recent spikes and drops in the Chinese stock market are artificially manipulated by the CCP. "The Chinese stock market is a complete scam, but many citizens don’t see the trap, like outsiders. Those of us within the system know that the government is using the stock market to siphon off citizens' savings in order to meet the 5% GDP growth target set by the top leadership."

She explained, "It's the fourth quarter now, and they realize that the GDP target of around 5% set by the top leader won’t be achieved. The economy is struggling, real estate is in trouble, and the three engines of GDP growth—investment, consumption, and exports—are all sputtering."

"The government is eyeing the citizens' savings, thinking that there’s money in people’s pockets, but they’re not spending it. So, they’ve come up with schemes to lure people into spending by hyping up the stock market, which in turn could boost GDP slightly."

According to the People's Bank of China, by the end of 2021, the total amount of household savings in China had reached 103 trillion yuan.

A report by "Dongfanghong Asset Management" on the outlook for the equity market in the fourth quarter of 2024 shows that the balance of household savings in China has now increased from 103 trillion to 147 trillion yuan.

Ms. Yu added, "So recently, even the top leadership, along with the central bank and the Ministry of Finance, have been endorsing the stock market, claiming an initial investment of 500 billion yuan in incremental capital with another 500 billion to follow, trying to lure the public into the stock market. But in reality, they’re not putting all this money into the market at once; they’re releasing it little by little."

CCP Launches Market Bailout, Encourages Millions of New Investors to Rush In

Epoch Times, October 21, 2024 – On September 24, the Chinese Communist Party (CCP) introduced a series of major monetary easing policies, including significantly lowering interest rates and injecting one trillion yuan in liquidity into the financial system.

On September 26, the CCP Politburo held a meeting, promising "necessary fiscal spending" to achieve the target of around 5% economic growth for the year, acknowledging that new challenges were emerging in the economy.

From September 24 to 28, the stock market soared for five consecutive trading days. The Shanghai Composite Index surged from around 2,750 points to over 3,200, rising by 25% within just five days.

Over 200 million retail investors, including millions of new investors, were swayed by the CCP’s propaganda about an impending "bull market" and rushed into the stock market.

During the seven-day National Day holiday, the A-shares market was closed, but many brokerage firms worked overtime, offering 24-hour account opening and consultation services for investors.

A couple in Yantai, Shandong, shared on social media that they were optimistic about the market and invested 1 million yuan, which they had set aside for mortgage payments, into the stock market on October 8.

A netizen on Douyin recounted, "One guy went crazy—he sold several luxury apartments and commercial properties, leveraged over 100 million yuan in cash, and put everything into the stock market on October 8. Within a few days, he lost 60%. The shock left him numb."

Reports indicated that the majority of the newly opened stock accounts were done online, with most new investors being born in the 1990s and 2000s, though some were from the 1980s generation.

On the first day after the National Day holiday, October 8, the stock market surged again. The Shanghai Composite Index opened 337.9 points higher, soaring by over 10%. Within just 20 minutes of trading, the total transaction volume on the Shanghai and Shenzhen stock exchanges exceeded 1 trillion yuan, marking the fastest-ever trillion-yuan turnover. By the end of the day, the total transaction volume reached a record 3.45 trillion yuan.

However, after six consecutive days of surging, the stock market experienced sharp declines starting on October 9, leaving retail investors with significant losses.

Ms. Yu, a senior accountant, warned, "Under the CCP system, Chinese people only know how to chase profits and money. Now there are no other viable investment opportunities, and many are unemployed with no source of income. They fail to realize that the Chinese stock market is a scam. Desperate for quick gains, they’ve sold their homes and taken out loans to jump into the stock market, only to fall into the trap."

CCP Launches New Bailout Measures, Mainland and Hong Kong Stocks Fall

On October 17, the Ministry of Housing and Urban-Rural Development announced new measures aimed at rescuing the housing market, including a promise to double the loan amount for unfinished residential projects, such as abandoned developments, to 4 trillion yuan.

Despite this, the three main indices on the A-shares market all closed lower that day, with the Shanghai Composite Index falling below the 3,200-point mark. Many real estate stocks plummeted by more than 20%. The Hong Kong stock market also declined, with the Hang Seng Index briefly dropping below 20,000 points.

Ms. Yu commented, "The stock market continues to fluctuate. Whenever the market dips, the government comes out with new regulations and measures to deceive the public again. Older, more experienced investors generally won’t risk putting their money in, but younger people who don’t understand how things work will still invest when the government makes announcements."

She added, "Many brokerage firms and executives at listed companies are well aware of the real situation in China. So, while these young people foolishly borrow money to drive the market up, the executives and brokers take advantage of the situation, cashing out and exiting. That’s why the market crashes again."

While millions of new investors rushed into the market, between September 24 and October 11, 172 listed companies issued announcements of major shareholders reducing their holdings, pulling substantial capital out of the stock market.

Former chief economist of a brokerage firm, Li Daxiao, told Southern Weekly that China's A-shares market was built "one penny at a time" by 210 million retail investors.

Ms. Yu explained, "China’s stock market doesn’t follow market or economic rules. For the past few days, the A-shares market has often risen in the morning and fallen in the afternoon. This is all designed to extract savings from the middle class. The central government is out of money, and local governments are broke too. The stock market has been sluggish for a long time, and the government has repeatedly tried to stimulate consumption to drive the internal economic cycle, but consumer spending keeps declining."

Expert: CCP Uses Stock Market to Finance Listed Companies—This Game Is Not Over Yet

U.S.-based economist David Huang revealed to Epoch Times that the recent sharp fluctuations in the Chinese stock market are part of a strategy by the Chinese Communist Party (CCP) to raise funds for listed companies.

He explained, "One of the key bailout measures introduced by the central bank is to help listed companies raise capital by allowing them to pledge their shares as collateral for loans from banks or the central bank. The companies then use the borrowed funds to repurchase their own stocks in the market."

Huang gave an example: "It’s like real estate developers mortgaging unsold properties to banks and then using the loans to repurchase their unfinished projects. This policy is quite unusual, which is why we saw a sudden surge in stock prices recently—because the central bank was behind the scenes, manipulating the market. Listed companies continuously repurchased their stocks, driving up the prices to lure retail investors in. After a seven-day holiday, those investors rushed to pool their funds to take over."

Huang pointed out, "This current wave of stock market rises and falls is not over yet because local governments have massive fiscal deficits. It’s not enough just to bring ordinary people into the market; they still need to attract more investment funds, including foreign capital and other funds within banks. So, this game is far from finished."

He added, "In the end, the outcome is clear: retail investors will lose money, while those manipulating the stock market will profit. This is an unchanging law throughout history."

Recently, Nomura Securities also issued a warning, stating that China’s stock market, which has seen its biggest rebound in 16 years, could collapse because the country’s economic foundation is much weaker than it was before the pandemic.

In a report to clients on October 3, Nomura wrote that, in the worst-case scenario, the frenzy in China's stock market could end in a crash, similar to what happened in 2015.

The 2015 stock market crash remains fresh in the memories of veteran investors. From November 2014 to June 2015, despite no significant changes in China’s economy, the A-shares market experienced an artificial "capital-driven bull market." However, starting on June 15, stock prices plummeted over 21 trading days, with 17 days seeing over a thousand stocks hitting their daily loss limit. This crash not only pushed the A-shares market into a nine-year bear market but also wiped out the wealth of countless Chinese families.

Editor: Li Yuyuan