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05 · A Brief History of China's Stock Market ​

China's stock market is barely thirty years old, yet it has replayed nearly two centuries of mature-market scripts: subscription-warrant frenzies, freed share prices, price limits, state-share reduction, split-share structure reform, leverage bulls, thousand-stock limit-downs, a failed circuit-breaker pilot, and the arrival of registration-based IPOs. This article walks through ten key stages chronologically, each reviewed from four angles — background, landmark events, market characteristics, and lessons — and closes with the market's most distinctive "signature patterns". Understand these, and you understand every "wolf is coming" prelude in the A-share market.

Disclaimer: Everything on this site is for learning and research only and does not constitute investment advice. Markets carry risk; invest with caution.

0. The Ledger First: The Full Cycle, 1990-2024 ​

EraStage keywordsShanghai Composite (approx.)Script in one line
1990-1992Opening and subscription warrants100 → 1334From counter trading to freed price limits — the nation's first taste of "stock trading"
1993-1995Bear market discipline1558 → 512Tightening and rectification; the first great bear teaches everyone a lesson
1996-2001Price limits + peak at 2245512 → 2245People's Daily editorial and price limits end the bull abruptly
2001-2005State-share reduction bear2245 → 998Four years of indiscriminate broad declines
2005-2008Reform bull meets global crisis998 → 6124 → 1664Sixfold in eighteen months, then halved twice within a year
2008-2014Post-crisis repair1664 → 1849 → 1974Stimulus, slow bull, cash crunch — drifting around 2,000 points
2014-2015Leveraged bull and crash1974 → 5178 → 2850Margin financing plus shadow leverage build an artificial bull and an unprecedented crash
2016-2018Slow bull in blue chips, trade war2638 → 3587 → 2440Foreign inflows and value re-rating, undone by tariffs
2019-2021Structural bull2440 → 3731ChiNext, new energy, core assets — mutual funds crowd together
2022-2024Adjustment and institutional change3731 → 2635 → 3674Full registration reform, normalized delisting, quant regulation

I. 1990: Shanghai and Shenzhen Open — From Counters to Exchanges ​

Background ​

In the late 1980s, shareholding reform was quietly piloted in China: Beijing Tianqiao Department Store, Shanghai Feile Audio, and others issued the earliest shares, but trading happened only through bank counters and street "scalpers" — a "grey over-the-counter" market with no formal venue. In 1990, to open financing channels for state-enterprise reform, the state decided to establish stock exchanges.

Landmark Events ​

  • December 19, 1990: the Shanghai Stock Exchange opens, listing its first eight stocks — the famous "Old Eight Stocks": Yanzhong Industrial, Vacuum Electronics, Feile Audio, Aishi Shares, Shenhua Industrial, Feile Shares, Yuyuan Tourist Mart, Zhejiang Phoenix. First-day turnover was only about RMB 490,000.
  • July 3, 1991: the Shenzhen Stock Exchange opens with its first five stocks: Shenzhen Development, Shenzhen Vanke, Shenzhen Jintian, Shenzhen Anda, Shenzhen Yuanye.
  • Share subscription warrants: in 1992 Shanghai issued about 2.07 million new-issue subscription warrants at RMB 30 each, entitling holders to buy IPO shares. Once the rally started, black-market warrant prices briefly exceeded RMB 1,000 apiece — "one piece of paper worth half a year's wages."
  • The T+0 era: after price controls were lifted in May 1992, A-shares traded T+0 (same-day buy and sell) with no daily price limits; intraday doublings and halvings were routine (T+1 arrived only in January 1995).

Market Characteristics ​

  • Tiny market: by end-1990 total Shanghai market cap was only a few hundred million yuan; a few hundred thousand shares of volume could swing the index wildly.
  • Minimal rules: no price limits, no shorting, no delisting; trading matched manually on the floor by "red vested" brokers.
  • Participants were mainly arbitrageurs: the earliest investors were small traders and government clerks trading for arbitrage, not investment.

Lessons ​

  • The "institutional dividend" of a nascent market doesn't last: the windfalls from T+0 and unlimited prices were gaps in the rulebook, not cheap valuations.
  • Subscription warrants taught: when "the right to buy" itself gets bid to the sky, the bubble has already entered its second stage.

II. May 1992: Prices Unleashed and the "August 10 Incident" ​

Background ​

After Deng Xiaoping's Southern Tour speeches in early 1992, reform momentum surged and shareholding pilots accelerated. In their early days the exchanges enforced a 1% daily price limit (0.5% for some stocks); prices were artificially suppressed, supply-demand was severely imbalanced — buyers queued endlessly while holders refused to sell.

Landmark Events ​

  • May 21, 1992: Shanghai abolishes price limits: the Shanghai Composite exploded from about 617 points to near 1266 in one session — up more than 100% in a single day — and climbed above 1334 points over subsequent sessions, the most extreme "liberation surge" in Chinese market history.
  • August 10, 1992: the "August 10 Incident": Shenzhen released about five million new-issue lottery subscription forms (winners could buy IPO shares at original price). Hundreds of thousands (reports say roughly 1.2 million) queued overnight; forms limited per person sold out within hours, leaving huge crowds empty-handed. Emotions boiled into gatherings and riots; only emergency extra issuance and pledges to investigate corruption calmed the situation the next day.

Market Characteristics ​

  • Extreme supply-demand imbalance: IPO prices sat far below secondary-market prices, so "subscribing to new shares" equaled free money, and warrant mania became national fashion.
  • No limits + extreme volatility: the index doubled on liberation day, then surrendered most gains within months.
  • Grassroots order broke down: August 10 was a textbook "institutional loopholes + mass frenzy" accident — allocation of lottery forms leaked everywhere, scalpers colluding with insiders.

Lessons ​

  • The incident directly led to the founding of the China Securities Regulatory Commission in October 1992 — regulation forever moves only when pushed by accidents.
  • The surer the arbitrage, the bloodier the fight: once "new issues always profit" became consensus, grabbing an allocation no longer guaranteed profit — the stampede had just begun.

III. 1996-1997 Bull-to-Bear Rotation: Arrival of the Price Limit System ​

Background ​

1993-1995 was the first great A-share bear: post-overheating austerity and the treasury bond futures war (the 1995 "327 Incident") crushed confidence; the Shanghai Composite fell from about 1558 points (Feb 1993) to around 512 in early 1996, most stocks losing half their value. A rate-cutting cycle began in 1996 and money returned.

Landmark Events ​

  • The 1996 bull: the Shenzhen Component rose from about 924 points early in the year to near 4522 by year-end (nearly 4x), and the Shanghai Composite climbed from ~512 to about 1510 by May 1997. Speculation ran hot; junk stocks soared indiscriminately.
  • December 16, 1996: the daily price limit arrives: both exchanges imposed 10% daily limits (5% for ST stocks) — in force ever since. The same day, the People's Daily published a special commentator article, "Correctly Understanding Today's Stock Market," harshly criticizing excessive speculation — the first time official media "shouted at the market"; the Shanghai Composite hit limit-down for consecutive days.
  • Peak in May 1997: regulators cracked down on bank funds illegally entering the market and raised stamp duty; compounded by the Asian financial crisis, the index ground lower from ~1510 into two years of adjustment.

Market Characteristics ​

  • Extreme volatility: before price limits, single-stock daily swings of ±30% were common; afterward, "limit-down boards that won't open" became the new panic signal.
  • "Policy signals" became the strongest indicator: People's Daily editorials, rate hikes, stamp duty changes could all flip the market instantly — the DNA of a policy-driven market was fixed in this era.
  • Theme speculation took shape: restructuring, bonus issues, and dealer-controlled stocks became uniquely A-share games.

Lessons ​

  • Price limits don't control risk; they postpone it: they slice one day's crash into consecutive limit-downs, trapping anyone trying to exit — institutional design amplified liquidity risk.

IV. 2001 State-Share Reduction and "Thousand-Stock Limit-downs" (The Four-Year Bear, 2001-2005) ​

Background ​

Around 2001, large amounts of state-owned and legal-person shares in listed companies couldn't circulate (about two-thirds of total shares), creating the oddity of "same shares, different rights, different prices." The state wanted to sell down state shares to fund social security but underestimated the market's fear of "massive dilution".

Landmark Events ​

  • June 12, 2001: the State Council issues the Interim Measures for Reducing State-Owned Shares to Fund Social Security: selling state shares equal to 10% of any fundraising, priced off secondary-market prices — the market read it as "the state cashing out at market prices, with retail holding the bag."
  • June 14, 2001: the Shanghai Composite peaks at 2245, starting a bear that lasted four and a half years: reduction was suspended in October 2001 and formally halted via securities markets in June 2002, but the decline proved irreversible.
  • Four years of thousand-stock-limit-down-style broad declines: the whole market held barely a thousand stocks, yet days when half of them hit limit-down occurred repeatedly (Dec 2001, Jan 2002, May-June 2005 amid unclear reform expectations), with index drops of 5%-9% commonplace. The Shanghai Composite ground from 2245 down to 998 points on June 6, 2005 — about -55% over four-plus years.
  • Major scandals surfaced in the same window: YinGuangXia accounting fraud (exposed 2001), the Zhongke Chuangye dealer collapse (2001), the Delong empire's fall (2004) — investors' first systematic encounter with "accounting fraud + dealer manipulation".

Market Characteristics ​

  • Policy uncertainty overwhelmed everything: the reduction plan "came and went, went and came"; unable to price it, the market simply kept falling.
  • The "fall → good news → bounce → fall again" loop: every rescue (suspending reductions, cutting stamp duty) bought only a bounce, followed by new lows.
  • Indiscriminate harvesting: about 90% of stocks fell across four years; "everything I buy gets trapped" became normal.

Lessons ​

  • "Dilution fear" is a recurring A-share affliction: every major financing event (reductions, refinancing, accelerated IPOs) triggers liquidity panic.
  • Policy zigzags hurt more than policy errors: get policy right in one stroke — repeated trial balloons make the market vote with its feet.
  • The four-year bear's greatest legacy was forcing the 2005 split-share reform — fundamental institutional fixes tend to arrive only through great collapses.

V. 2005 Split-Share Reform → 2007 Great Bull → 2008 Financial Crisis ​

Background ​

The 2001-2005 bear made regulators realize: without fixing the historical legacy of "split-share structure", A-shares could never reach genuine market-based pricing. In April 2005 the CSRC launched the reform pilot, whose core idea: non-tradable shareholders gift shares/pay consideration to tradable shareholders in exchange for liquidity rights — "buying out" rather than "forcing".

Landmark Events ​

  • April 29, 2005: the reform pilot launches; on June 6, 2005, the Shanghai Composite bottoms at 998 (it would not be breached again for about nine years).
  • The 2006-2007 mega-bull: reform consideration + yuan appreciation + trade-surplus liquidity flood carried the index from 998 to 6124 points on October 16, 2007 — up about 5.1x in under eighteen months. En route came the "5/30 stamp duty hike" (May 30, 2007, nearly a thousand stocks limit-down across both exchanges) — policy cooling failed; the market kept galloping.
  • Nationwide stock fever and fund mania: A-share accounts passed 100 million in 2007; new fund subscriptions were rationed by quota, with single new funds raising tens of billions in a day; brokerage branches queuing for accounts and office workers trading at desks became era icons.
  • The 2008 financial crisis: the U.S. subprime crisis ignited global recession and A-shares crashed with world markets. The Shanghai Composite fell from 6124 to 1664 on October 28, 2008 — roughly -72% in a year, a double halving. China's "four trillion" stimulus launched in November 2008 finally stopped the fall.

Market Characteristics ​

  • Every negative became a buy point: after the May 2007 stamp duty hike, the market pulled back barely a week before making new highs.
  • A fund-driven bull: household savings migrated en masse into funds crowding core assets (financials, property, metals), with "hundred-yuan stocks" the constant talking point.
  • Liquidity evaporated instantly at the crash: second-half 2008 turnover shrank below a tenth of the bull peak — can't sell, afraid to buy.

Lessons ​

  • A bull built on institutional repair still faces final settlement by valuation and sentiment: 6124 corresponded to average P/E above 50 — bubbles need no excuse, only time.
  • The 72% fall from 6124 to 1664 told everyone: A-shares are not a market that "never falls enough" — they're among the markets that fall hardest.
  • Fund mania is double-edged: many who chased funds at the 2007 top waited five years to break even — "professional wealth management" escapes no cycle.

VI. 2014-2015 Leverage Bull and Crash: Margin Financing, Shadow Leverage, and Thousand-Stock Limit-downs ​

Background ​

In late 2014, facing economic slowdown, the central bank began easing while real-economy returns stayed low — money flooded into stocks. Meanwhile leverage went fully mainstream: broker margin financing expanded rapidly, and more critically off-exchange financed accounts let retail borrow at 1:3 to 1:10 through internet platforms, in a regulatory vacuum.

Landmark Events ​

  • July 2014-June 2015: the Shanghai Composite rose from ~1974 to 5178 on June 12, 2015 — up about 1.6x inside a year; ChiNext climbed from around 1200 to 4037. Themes like "Belt and Road" and "Internet Plus" soared indiscriminately.
  • Margin balance surged from ~RMB 350 billion in early 2014 to a peak of ~RMB 2.27 trillion in June 2015; off-exchange financing estimated in the trillions — unprecedented aggregate market leverage.
  • The crash begins June 15, 2015: the regulatory cleanup of shadow financing was the trigger; within a month the Shanghai Composite fell from 5178 to 3373 by July 9 (-35%). Repeated waves of thousand-stock limit-downs (over 2,000 stocks limit-down in single days) struck, and on July 8, 2015, more than 1,700 stocks suspended trading to hide — "a thousand stocks limit-down, a thousand stocks halted" became the darkest eight characters in A-share history.
  • Rescue measures: emergency rate and reserve cuts, massive CSF Corporation buying, brokerages pooling ~RMB 120 billion into a stabilization fund, IPO suspension, public security organs hunting malicious shorts. A second crash followed in late August (Shanghai Composite -8.49% on Aug 24).
  • January 2016: circuit breaker fails: implemented Jan 1 (CSI 300 falling 5% halts 15 minutes, 7% closes early), triggered on day one (Jan 4), again ~15 minutes after open on Jan 7; suspended Jan 8 — four trading days from launch to abolition.

Market Characteristics ​

  • Leverage everywhere: margin, umbrella trusts, internet financing — retail at 5-10x meant thousand-stock limit-downs caused chain-reaction liquidations — unsellable at the limit board, forced closures without counterparties.
  • Liquidity went instantly to zero: suspensions were "evasive support" — sellers stuck, and resumed stocks fell even harder; the market's credit chain snapped.
  • Rescue changed market structure: CSF holdings became a major institution, and "national team" entered the A-share dictionary.

Lessons ​

  • Leveraged bulls always end in liquidation cascades: margin and shadow financing "ammunition" ultimately becomes stampede fuel.
  • Circuit breakers proved: adding breakers atop existing price limits puts a turbocharger on panic — stacking liquidity tools manufactures liquidity crises.
  • Mass suspensions were institutional self-deception: halting trading freezes prices, not valuation gravity.

VII. 2016-2017 Slow Bull and Blue Chips: Foreign Inflows and the Start of the "Mao Index" Era ​

Background ​

After the crash, the Shanghai Composite bottomed near 2638 in early 2016. Regulators pushed "deleverage, strict supervision" (curbing insurers' hostile stake-building, tightening M&A) while opening up accelerated: Shanghai-Hong Kong Stock Connect (Nov 2014) and Shenzhen-Hong Kong Connect (Dec 2016) let foreign capital systematically buy A-shares for the first time, and MSCI announced A-share inclusion into its emerging-markets indexes in June 2017 (effective 2018).

Landmark Events ​

  • The 2016-2017 "slow bull": the Shanghai Composite crawled from 2638 to 3587 by January 2018 — about +36% over two years, far slower than past bulls, hence "slow bull".
  • Blue-chip rally / year one of value investing: leaders like Kweichow Moutai, Gree Electric, Midea, and Ping An — a Chinese "Nifty Fifty" — kept strengthening; Moutai more than doubled in 2017. Institutions began treating "core assets" as standard allocations — the "Mao Index" label spread only in 2020-21, but its style started here.
  • Persistent foreign inflows: Stock Connect net buying reached ~RMB 200 billion in 2017 and ~290 billion in 2018; foreigners favored high ROE, leaders, low volatility, reshaping pricing style — "northbound flows" became one of A-shares' most-watched incremental indicators.

Market Characteristics ​

  • Deepening divergence: the index rose slowly but only about 30% of stocks rose — the first widespread "index bull, stock bear" structural market.
  • Pricing power shifted: from "retail sentiment" toward "institutional and foreign valuation frameworks"; earnings and cash flow mattered again.
  • Volatility dropped markedly: the Shanghai Composite's maximum 2017 drawdown stayed under 8% — a sharp contrast with 2015.

Lessons ​

  • Money's nature determines the market's nature: leveraged money makes mad bulls; foreign and long-term institutions make slow bulls — watching who provides incremental money matters more than watching index levels.
  • In structural markets, "picking the wrong sector = missing the whole move": while indexes crept up, junk stocks still bled — in the age of divergence, stock-picking beats timing.

VIII. The 2018 Trade-War Bear ​

Background ​

The slow bull peaked naturally at 3587 in early 2018; from March the U.S. announced tariffs on Chinese goods, the trade conflict escalated fully, and combined with domestic deleveraging the market entered a bear beset "by troubles at home and abroad".

Landmark Events ​

  • March 2018: the trade war begins: the Trump administration announced tariffs on some $60 billion of Chinese goods; tariffs escalated repeatedly thereafter amid on-off negotiations ("talk, fight, talk").
  • A full year of one-way decline: the Shanghai Composite fell from 3587 (Jan 29, 2018) to 2440 on January 4, 2019 — about -24.6% for the year; individual names fell near-crash levels, about 90% declining, many beyond -50%.
  • Policy offsets: Oct-Nov 2018 brought intensive top-level endorsements of private enterprise, multiple reserve cuts, relaxed M&A rules, encouraged buybacks — a "policy bottom" formed near 2440.

Market Characteristics ​

  • External variables dominated: tariff lists and negotiation headlines set each day's direction; under bombardment the market grew numb to good news.
  • Valuations hit historic lows: the market-wide P/E touched about 12x, near 2008/2013 extremes — cheapness is never a bottom signal by itself, but it creates the conditions for one.
  • Passive vs active money diverged: foreign inflows persisted against frozen domestic sentiment — "foreign-domestic disagreement" defined the year.

Lessons ​

  • External-shock bears are defined by unpredictability: how talks go and how long they last, nobody knows — the only answer is position management, not prediction.
  • Wait for bad news to actually finish before calling "bad news out": every 2018 "thaw" was a bounce, not a reversal — in trending declines, don't chase rallies.

IX. 2019-2021 Structural Bull: ChiNext, New Energy, and the Mutual-Fund Herd ​

Background ​

After 2440 came recovery on policy support plus loose liquidity. The STAR Market opened in 2019 piloting registration-based IPOs; after COVID, global easing in 2020 powered a structural bull lasting nearly three years — but a "partial" one: indexes crept, select tracks and leaders soared, and most stocks stood still.

Landmark Events ​

  • ChiNext mega-bull: the ChiNext Index rose from ~1200 in early 2019 to 3576 in July 2021 — nearly triple, far outpacing the Shanghai Composite.
  • New energy and core assets: through 2020-21 CATL, BYD, and other new-energy leaders alternated with liquor and pharma "core assets" at the lead; the Mao Index topped in February 2021 (the Shanghai Composite hit 3731 on the 18th of the same month), then the herd unraveled and core assets drew down 30%-50% broadly.
  • Fund herd and fund mania: new public fund launches exceeded RMB 3 trillion in 2020, a record; star managers went mainstream; fund heavyweights (liquor, new energy, pharma) self-reinforced — "buying funds" became a national topic again as history entered a new version of the "institutional bull".
  • Registration pilot: the STAR Market opened July 22, 2019 (first 25 listings); ChiNext adopted registration on August 24, 2020 — "IPO subscriptions always win" began seeing break-issue losses.

Market Characteristics ​

  • Extreme structural divergence: while the ChiNext nearly tripled over 2019-2021, over 60% of stocks underperformed the index — "track" replaced "individual stock" as the unit of trading.
  • Herd-and-unravel cycles: homogeneous institutional money (relative benchmarks, chasing booms) made "crowding → valuation overshoot → unravel → re-crowd" routine; unravels were vicious multi-into-multi selloffs.
  • Retail entered via funds: direct stock ownership share fell as indirect entry became mainstream — retail didn't disappear; it changed clothes.

Lessons ​

  • Structural-bull tops kill too: those who bought core assets at the February 2021 peak saw -30% to -50% within months — herding's endpoint differs little from retail chasing highs.
  • "Good company ≠ good price": Mao Index companies were all fine companies, but paying five years of future earnings upfront still gets you falling prices.
  • New-fund launch waves ("sold-out-in-a-day funds") are a high-frequency topping indicator — household savings enthusiasm always peaks nearest the top.

X. 2022-2024 Adjustment and Institutional Change: Registration Reform, Delisting, and Quant Regulation ​

Background ​

After core assets peaked in February 2021, A-shares adjusted for three years: violent Fed hikes abroad, the Russia-Ukraine war, recurring outbreaks — the Shanghai Composite fell about 15% in 2022. Yet these were also the three densest years of institutional change — the market completed its coming-of-age during the decline.

Landmark Events ​

  • 2022 adjustment: the index bottomed twice (2863 on April 27, 2885 on October 31); 2023 traded narrowly with "China special valuation" and AI theme rotations, ending slightly down.
  • February 17, 2023: full registration-based IPO system lands: from STAR (2019) to ChiNext (2020) to the entire market, issuance finally left approval-based behind; IPO break-issues became normal and "subscriptions always win" history.
  • Normalized delisting: after the late-2020 delisting rules, delistings rose yearly (~42 in 2022, ~45 in 2023, ~50 in 2024); par-value and financial delistings became routine and shell-game myths died — A-shares truly gained "ins and outs" for the first time.
  • Quant regulation tightens: from H2 2023 regulators tightened high-frequency trading and securities lending T+0; in May 2024 the Provisions on Programmatic Trading Management were issued — quant's voice and controversy grew together.
  • February 2024 liquidity crisis and policy bottom: on February 5, 2024, the Shanghai Composite hit 2635 (a liquidity spiral of snowball product knock-ins compounding margin forced liquidations); Central Huijin announced purchases and regulators spoke in force — the market stabilized.
  • September 24, 2024 "package of financial policies": the PBoC created two new monetary tools supporting equities, the CSRC unveiled M&A reforms, and on September 26 the Politburo unusually convened on the economy and capital markets — the index soared for days, hitting 3674 on October 8 with record turnover above RMB 3.4 trillion. For the full year the index gained about 12.7%, ending three straight down years.

Market Characteristics ​

  • "The index wrestles around 3,000 while individual stocks fight for survival at delisting's edge": structural divergence upgraded from sector-level to life-or-death stock-level.
  • Institutional variables became the biggest variables: registration changes supply, delisting kills shell value, quant rewires microstructure — three forces repricing simultaneously.
  • Policy response speed and force clearly escalated: from "CSRC notices" to "multi-ministry joint action" to "Politburo setting the tone" — the policy toolbox moved up levels.

Lessons ​

  • After registration reform, stock selection turned from elective to required: break-issues and delisting retired the old wisdom of "buy and forget" — waiting for junk to recover may instead bring the delisting notice.
  • Quant versus retail isn't "who's right" but a contest of speed versus patience: high frequency harvests emotional money; retail's only moat is lowering trading frequency.

XI. Summary: The Market's "Signature Patterns" ​

Viewed together across thirty-plus years, several patterns belong to China's stock market alone — explaining why A-shares "keep repeating themselves":

💡 Policy Sets Direction, Money Sets Pace

Policy bottoms come faster and harder, yet a "market bottom" may still follow the policy bottom — policy sets direction, money sets pace. After the February 2024 policy bottom the index probed lows again in July and truly reversed only in September — the classic case.

11.1 Policy-Driven Character: The A-share "Invisible Hand" ​

  • Every major top and bottom carries clear policy fingerprints: the 1994 "three rescue policies", the 1996 People's Daily editorial, the 2001 state-share reduction, the 2005 reform, the 2008 stimulus, the 2015 national-team rescue, the 2024 September 24 package — tops are mostly triggered by policy tightening; bottoms mostly confirmed by policy support.
  • The sequence "policy bottom → market bottom → economic bottom" recurs: policy speaks first, the market confirms later, fundamentals last — and "the market bottom sits below the policy bottom" is a standing A-share performance.
  • Investor takeaway: you cannot discuss A-share technicals apart from policy — key meetings, regulatory documents, and official-media statements are alternative candlesticks you must watch.

11.2 Short Bulls, Long Bears: Statistically Brutal Odds ​

  • From 1990-2024, Shanghai Composite bull runs lasted roughly 6-24 months against 24-60 month bears/corrections — a bull:bear ratio near 1:3; bulls rise hard and bears fall deep: "months to climb, years to give back".
  • The index haunts 3,000 points: since 2007 it has "returned to 3,000" repeatedly, and by 2024 still sat below its 2007 peak — level worshipers marking time for fifteen years.
  • The folk saying "seven lose, two break even, one wins" isn't rigorous statistics but points the right way: most retail losses come from entering mid-to-late bull and exiting at bear bottoms — a pure timing mismatch.

11.3 Heavy Retail Participation: The Cost of Structure ​

  • Historically retail holds about half of A-share float but generates the overwhelming majority of turnover (over 80% early on, still ~60%+ recently) — few hold, many trade.
  • Behavioral consequences: turnover far above mature markets, chasing rallies and dumping dips, trading on tips, all-in single stocks; retail sprints in at bull tops and capitulates at bear bottoms — amplifying every swing.
  • "De-retailing" is proclaimed every bull yet never completes: since 2015 retail returned "through funds" — emotion didn't vanish; it found a new entrance.

11.4 Appendix: Quick-Reference A-share Chronicle ​

DateEventMeaning in one line
1990.12.19SSE opens, Old Eight Stocks listA-shares born
1991.7.3SZSE opens, first five stocksDual-market structure
1992.5.21Price controls lifted, +105% in a dayFirst step of market pricing
1992.8.10"August 10 Incident"Directly spawns the CSRC
1992.10CSRC foundedYear one of regulation
1996.12.16Price limits land + People's Daily editorialInstitution and rhetoric strike together
2001.6.14State-share reduction; peak at 2245Start of the four-year bear
2005.6.6998 points; reform pilot startsHistoric great bottom
2007.10.166124 pointsPeak of nationwide stock fever
2008.10.281664 (-72% in a year)Crisis depths
2014.11.17Shanghai-Hong Kong Connect opensForeign capital era begins
2015.6.125178, then the crashThe leveraged bull's price
2016.1.1-1.8Circuit breaker dies in four daysLesson in liquidity tools
2018.1.293587, then the trade-war bearSlow bull ends
2019.7.22STAR Market opens (registration pilot)Institutional change begins
2021.2.183731; core assets peakHerd unravels
2023.2.17Full registration system landsIssuance regime transformed
2024.9.24Package of financial policiesPolicy bottom reconfirmed

⚠️ Risk Warning

Historical events and data here serve teaching and research purposes only and do not constitute investment advice. Past index levels and moves are hindsight, not forecasts of future returns. A-shares' policy character and "short bulls, long bears" pattern exist to help you understand market structure — not to call precise tops or bottoms. Leverage (margin financing, shadow financing, futures) has repeatedly amplified losses into liquidation throughout A-share history; participate only with money you can afford to lose, and understand margin and forced-liquidation mechanics before trading (see Chapter 03 - Futures). Historical data, not indicative of future results.

Further Reading ​

For study and research only — not investment advice. Markets are risky.

Kline Buty · Trading Knowledge Base