“Some investors, especially newcomers, lack securities knowledge, risk awareness, and the ability to afford losses,” said Shang Fulin, chairman of the China Securities Regulatory Commission.
Which roughly translates to… They have no idea what they are doing; they don’t know the meaning of the phrase “too much”; a lot of homes, cars and those allegedly prime vintage bottles of wine Chinese families keep on the dresser are going to end up repossessed.
Isn’t it great when regulators turn to tough love?
What’s particularly encouraging is Shang’s follow-up remark that brokerages should help make investors understand that the government won’t bail them out if the market goes belly up. Not only is China’s chief securities policeman talking tough love, he seems keen to practice it too.
But you have to wonder what would make a profit-minded Chinese broker talk people out of investing when his primary source of income is transaction fees? And he has no mechanism to hedge his risk and make money when the market is going down.