China’s slew of retail investors that piled into mutual funds in the past year are now offloading prized heirlooms as they cope with losses they have suffered under the nation’s US$1 trillion stock market rout.
More than 200,000 users have flocked to Chinese online resale platform Xianyu (閒魚) in the past week, seeking to offset losses from their mutual fund investments by putting precious possessions for sale, according to a statement posted on Friday on the marketplace affiliated with Alibaba Group Holding Ltd (阿里巴巴).
Xianyu was referring to items that were being advertised with the phrase “mutual fund losses.”
“A diamond engagement ring” and “a watch passed down by the great grandfather” were among the prized possessions for sale, the statement posted on Xianyu’s official WeChat account said.
The message from Xianyu comes as Chinese investors pile into professionally managed funds to chase market-trouncing returns, shifting away from a once more popular do-it-yourself style of trading stocks.
However, with money managers having thrown money at a handful of market darlings, such as Kweichow Moutai Co (貴州茅台) — pushing the liquor maker’s valuations to near records — the correction in stocks has also accelerated mutual fund losses on the way down.
“It may be convenient to dispose of idle goods when you need money following investment losses, but be wary that the price is separating from valuable memories,” Xianyu said in the statement.
China’s stock market has wiped out US$1 trillion in value in the past three weeks.
The CSI 300 Index fell 2.2 percent yesterday, as persistent liquidity concerns overshadowed data showing the strength of the nation’s economic recovery.
Funds fronted by star managers were also battered. Zhang Kun’s (張坤) popular E Fund Blue Chip Selected Mixed Fund had nearly erased this year’s gains by Friday, according to data from financial Web site East Money’s fund tracker.
Still, some market watchers downplayed the significance of the Xianyu statement, saying mutual fund investors should accept losses in volatile markets in anticipation of long-term profits.
Moreover, some investors that put up possessions for sale did not seem to be motivated by making up for losses.
“I am putting this piece of mineral up for sale to double down on mutual funds once the market rebounds,” one user on Xianyu said, offering a blue-colored stone for sale for 35 yuan (US$5.40).
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