2015-06-22

Chinese Investor Goes Up 600% Then Loses Everything in A Week; Many People Leveraged 5 to 1

An investor in China doesn't know what to tell his wife. He took 100,000 yuan that was supposed to go towards buying a car and threw it into the market instead. Now he's lost everything. Most shocking, at one point he had sextupled his money.

Initially he had 100,000 yuan. This amount wasn't enough to obtain margin with the broker, so he went to an outside firm specializing in equity loans and borrowed 500,000 yuan. He turned his 600,000 yuan into 1.2 million when the stock market had nearly doubled by the end of May. He got nervous and paid back the 500,000 yuan, and was sitting on a profit of 600,000 yuan on his initial 100,000 yuan capital. He was ready to give his wife a big surprise, but after seeing stocks drop in the first week of June, he got an itch and decided to throw his capital back in the market figuring it'll break the 2007 high.

Instead of taking out his initial capital, he goes back to the finance company and levers up 5 to 1 again, borrowing 3.5 million yuan. He figured if he could turn 100,000 into 600,000, he could double his 4.2 million account and use the money to buy a house. This time he took his money and put it all in the GEM market. Last week he started losing 100,000 a day, 200,000 a day, and then in the Friday plunge, he was completely wiped out. The financing company called in his loans and he was left with nothing. The only silver lining is he was lucky to escape without debt.

An older investor named Cheng says that "not a few" people are levered 5:1.

Sina: 配资炒股大喜与大悲:股民狂赚6倍后又全部亏光

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