Latest Cover Story | Internet Celebrity Hosts Dominate Small and Mid-Cap Stocks: How to Face the New Rhythm of China's A-shares? (AI Translation)
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文｜财新周刊 岳跃 全月
By Caixin Weekly's Yue Yue, Quan Yue
文｜财新周刊 岳跃 全月
By Caixin Weekly's Yue Yue Quan Yue
“这个时代的节奏，想不跟都不可能了。”早上8点，刚进办公室的老李打开手机，首先进入公司在各个平台的直播间，简单看了一下后台数据，又进入多个热门股市直播间。“一直觉得抖音、快手这种直播平台的短视频大部分摆拍、低俗无聊、浪费时间，我一直坚决不下载，也不让家中老人、孩子看，但是现在这些突然变成了工作的一部分。”在某中部省份中型券商担任高管的老李，上世纪90年代毕业于中央财经大学后即进入证券行业，先后在大大小小券商的营业部、经纪业务部、资管部工作，现在负责这家券商的经纪业务条线。
"The pace of this era is impossible not to keep up with." At 8 a.m., as Old Li arrived at the office, he opened his phone and first entered the company's live streaming rooms on various platforms. After a quick look at the backend data, he also checked into several popular stock market streams. "I always thought short videos on platforms like Douyin and Kuaishou were mostly staged, vulgar, boring, and a waste of time. I was firm about not downloading them or letting the elderly and children at home watch them, but now they’ve suddenly become part of my job." Old Li, an executive at a mid-sized brokerage in a central province, graduated from the Central University of Finance and Economics in the 1990s and entered the securities industry. He has worked in various roles across different brokerages’ sales departments, brokerage divisions, and asset management departments, and now heads the brokerage business line at his firm.
“我们从外部招聘了专门负责直播的人员，也鼓励内部有网红潜质的员工积极参与。现在A股生态完全变了。”老李说，“金融行业高学历、高门槛的特征已经被击垮，虽然心里对那些搞直播的还是有些不以为然，但那是实打实的进账啊！”
"We've hired personnel specialized in live streaming from outside and encourage employees with influencer potential internally to actively participate. The ecology of A-shares has completely changed," said Old Li. "The high education and high threshold characteristics of the financial industry have been shattered. Though I still feel somewhat disdainful about those engaged in live streaming, it undeniably brings in real income!"
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- Retail investor account openings surged in late 2024 due to platform referrals, peaking with 6.84 million new accounts in October, largely from individuals born in the '90s and '00s.
- Small and mid-cap stocks outperformed larger indices, with notable gains and high turnover rates, driven by information from social media, short videos, and live-stream sessions.
- Regulatory challenges include market manipulation and illegal stock recommendations, with many securities firms penalized for compliance issues, while licensed investment advisors exploit new platforms.
The article from Caixin Weekly by Yue Yue Quan Yue, titled "Cover Story | The Live Broadcasting Era of A-Shares," delves into the changing dynamics of China's securities market, driven majorly by the rise of live streaming and short video platforms as key players in the investment sphere[para. 1].
The story opens with Old Li, an
executive at a mid-sized brokerage firm,
who reflects on how platforms like Douyin and Kuaishou,
once considered a waste of time,
are now integral to his work.
Li observes significant changes in the market landscape,
highlighting the role of live streaming in investor engagement,
particularly amid a surge of retail investor account openings.
His firm,
experiencing brisk online account opening activity,
saw account numbers soar to 6.84 million in October 2024,
echoing earlier booms in 2015[para. 1][para. 2].
The new wave of investors largely comprises younger generations born in the 1990s and 2000s—digital natives unfamiliar with traditional financial approaches but attracted by the thrill and entertainment intersecting the contemporary investment landscape[para. 3]. Zhang Xiaoyan from Tsinghua University emphasizes how these young investors view investing simplistically, correlating it to gaming[para. 4].
Old Li notes the vital role social media and short videos play in shaping market trends, attributing a majority of the new account openings to these platforms. Data shows platforms like Douyin,
Kuaishou, and Xiaohongshu serve as sources for speculative investing advice, leading some investors towards less informed decision-making patterns characterized by whimsical trading and a reliance on influencer suggestions[para. 4][para. 5].
Moreover, short videos and live streams have contributed to the gains in small and mid-cap stocks. Data from September to November suggests that smaller companies in the CSI 1000 and 2000 indices reported gains averaging over 40%, contrasted with the larger blue-chip index gains below 30%[para. 6]. Despite the rise in retail investor involvement, historical challenges, such as market manipulation and improper conduct, persist as exemplified in regulatory scrutiny of suspicious activities and false reporting incidents noted about 270 times by the Shenzhen Stock Exchange in November 2024[para. 7].
The reportage also contrasts the investment trends in U.S. markets with the highly retail-investor-dominated Chinese market. In the U.S., retail participation shrunk over the decades, implying a different trajectory compared to China's vibrant new investor base[para. 8]. The role of influencers, presenting simplified and often misleading stock recommendations for online audiences, is under regulatory spotlight for its potential to manipulate or misguide retail investors[para. 9].
Influencers in China,
even without professional credentials,
can impact stock movements when they discuss investment opportunities in accessible and engaging manners,
like the banned Douyin influencer “Da Lan”,
who allegedly influenced stock prices through speculation and promotions[para. 10].
This contrasts with U.S. regulations, which require influencers providing paid investment advice to register with the SEC[para. 11].
Regulatory bodies such as the China Securities Regulatory Commission are tackling these issues, driving compliance in financial advisory sectors, and aiming to curb potentially manipulative practices[para. 12]. Despite increased scrutiny, challenges remain due to the wide reach of social media and the nuanced nature of investment advice provided through these platforms[para. 13].
In conclusion, the article outlines the rapidly evolving digitalization in the Chinese securities market, with significant engagement from younger retail investors driven by technological advancements in live streaming and social media. These platforms amalgamate traditional stock trading with elements of entertainment and social interaction. This nascent phase calls for tighter regulatory frameworks to enhance investor literacy and safeguard market integrity in an era where access to information and investment is democratically extensive yet fraught with high-risk behaviors[para. 14][para. 15].
- Hithink RoyalFlush Information Network
- Hithink RoyalFlush Information Network, known as 同花顺, is highlighted for its securities investment services. Its subsidiary, Zhejiang Hithink RoyalFlush Cloud Software, holds a securities investment advisory license. Recently, the company faced regulatory scrutiny for issues in its investment advice software, with its platform serving numerous brokers and offering significant conversion and commission-related services.
- Zhejiang Hithink RoyalFlush Cloud Software
- Zhejiang Hithink RoyalFlush Cloud Software, a subsidiary of the listed company Hithink RoyalFlush Information Network, holds a securities investment consulting license. It was fined by the Zhejiang Securities Regulatory Bureau for issues including inadequate compliance control in live streaming and implying stock recommendations. This company has received multiple penalties in recent years and primarily offers stock-related software products and investment advisory services.
- Zhongtian Securities
- The article mentions Zhongtian Securities receiving a warning from the Liaoning Securities Regulatory Bureau. The reason includes "some network broadcasts not being filed and lacking compliance control." This is in the context of ongoing regulatory scrutiny over financial institutions using online platforms for potentially risky promotional activities.
- Huatai Securities
- In the article, Huatai Securities is mentioned as the first brokerage to stop providing order services through third-party platforms like Tonghuashun, citing its strong brokerage business and IT capabilities as reasons for choosing not to be reliant on such platforms.
- China Securities
- The article discusses the increasing influence of live streaming and short video platforms on China's securities market, highlighting a surge in new retail investors from platforms like TikTok and Kuaishou. These investors, mostly younger and lacking financial literacy, often follow influencer recommendations without fundamental analysis. The article also touches on regulatory challenges and the evolving dynamics of securities trading in China.
- Guosen Securities
- The article does not specifically mention Guosen Securities. It provides a detailed analysis of the rise of live-streaming investment advice in the Chinese stock market, the involvement of retail investors, and the broader impacts on the industry and regulation.
- Industrial Securities
- The article does not provide specific information about Industrial Securities. It primarily focuses on the impact of social media and livestreaming on stock market behavior, particularly among new investors, and the challenges it presents for financial regulation in China.
- Huachuang Securities
- Huachuang Securities is mentioned in the article as being the default broker option when clicking to open a stock account on the website of Tonghuashun, a popular financial information service platform, during a user test.
- SDIC Securities
- The article mentions SDIC Securities in the context of the stock page on the Alipay platform. When accessing the "open an account" option, SDIC Securities is the default choice with no alternative brokerage options displayed. This suggests a commercial interest in highlighting SDIC Securities prominently over other brokerages on the platform.
- Beijing Compass Technology Development
- Beijing Compass Technology Development is involved in selling stock trading software and services. It has faced multiple complaints related to its sales practices, with allegations of using inducements and misleading promotions to sell high-priced software upgrades. The company is one of several licensed securities investment consulting firms in China, dealing with accusations of controversial sales tactics similar to those of other firms in the sector.
- Shanghai Nineway Cloud Technology
- Shanghai Nineway Cloud Technology is a subsidiary of Nineway Intelligent Holdings. As of mid-2024, the company employed 488 accounts on social media platforms like Douyin and Xiaohongshu, amassing 46 million followers. In the first half of 2024, they conducted a total of 12,487 live broadcasts, accumulating 23,466 hours, marking significant growth from the previous year.
- Jiangsu Bairuiying Securities Consulting
- Jiangsu Bairuiying Securities Consulting is mentioned as one of several licensed securities consulting firms implicated in multiple complaints on the Black Cat Consumer Services platform. These complaints typically involve selling software and stock trading services, often using tactics that lure members into purchasing more expensive upgrades.
- EmInfo
- The article mentions EmInfo as EmInfo Inc., known for offering an investment insights community product. They provide users with financial data and tools to help with investment decisions, but specific details about their operations or involvement in the discussed issues are not provided in the article.
- By September 24, 2024：
- The Tonghuashun app was downloaded 2.225 million times and Dongfang Caifu was downloaded 648,000 times by October 22, 2024.
- By September 30, 2024：
- The first wave of interest in A-share related topics peaked across all social media platforms.
- Late September 2024：
- There was a sudden surge in the market, leading to a wave of retail investor account openings at the securities firm where Lao Li works.
- October 2024：
- The number of new individual accounts opened reached 6.84 million, nearly five times the average monthly level for the first nine months of the year.
- October 23, 2024, to November 5, 2024：
- Chuanfa Longmang's shares surged by 107.4% with high individual investor participation.
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