China’s latest stock market rally has quickly turned retail investors’ mood across the country from extremely bearish to very bullish, as domestic social media fans a growing sentiment of FOMO – the fear of missing out – even though another round of volatility could be just down the road.
That investor euphoria, aroused by the proliferation of upbeat short-video posts on Chinese social media, has put the three major stock markets of Hong Kong, Shanghai and Shenzhen firmly in bull-market territory.
Social media’s influence on retail investors, particularly amateur traders, initially gained major attention in the United States via the so-called meme stock phenomenon, which involves retail investors hyping up stocks on platforms such as Reddit, Facebook and Twitter, now known as X. One notorious example is US bricks-and-mortar video game retailer GameStop, which saw a buying frenzy organised by a group of amateur investors on Reddit.
Such power has become particularly potent in China, where retail investors hold sway in the country’s stock markets. Social media is now the go-to place online to gather market opinion, replacing economists and professional analysts.
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