In the last trading week of January 2021, Wall Street hedge funds and institutional short-sellers in the United States lost heavily in the long-short game of GameStop (Game Station) stock, while one of its counterparty bulls was amateur retail trading from the Internet Community.
The Melvin Capital hedge fund and the well-known short-selling agency Citron Research (Citron Research) announced on Twitter that they are short-selling its GameStop stock and have taken short-selling actions. Reddit retail social forum group Wall Street Bets launched a large-scale short squeeze (short squeeze) campaign on major social media, pushing its GME stock price from $17 at the beginning of the month to a maximum of $347. About 19 times.
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The anger of retail investors shocked the White House, and the United States ushered in a wave of "anti-institutionalization"
The main reasons behind the WSB incident in early 2021 and the "Occupy Wall Street Movement" in September 2011 are dissatisfaction with the disparity between the rich and the poor and the economic sluggishness. Ten years ago was a wave of unemployment after the financial crisis, but this time it is a wave of closures of established entities under the influence of the epidemic. According to the Financial Times, large U.S. brokerages including Robinhood, the Internet emerging brokerage that retail investors love most, have closed the trading of GME, AMC, Nokia and other stocks that have been praised by the WSB forum. And launched a "delete Robinhood app" protest on Twitter.
According to statistics, on January 29, 2021, there were 48 Twitter threads with more than 50 reposts. Many influential figures in the traditional financial and digital currency industries participated in this online event, such as the famous Social Capital venture capitalist and NBA Golden State Warriors board member Chamath Palihapitiya also joined the online event to criticize Robinhood, while publicly pointing out on CNBC radio that hedge funds and Wall Street abuse their power to treat ordinary investors unfairly.
According to the Wall Street Journal report on February 3, U.S. Treasury Secretary Yellen has begun to convene a meeting to discuss the recent market volatility related to GameStop with the top financial regulator. Steve Cohen, the founder of Star Investment Company, which injected capital to support the hedge fund of Melvin Capital, also closed his social media account because he couldn't stand the public opinion and threats. In short, American retail traders and netizens are dissatisfied with Wall Street institutions again.
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China's new generation of retail investors have increased trust in financial institutions
In contrast to American retail traders, China's investment market is fully embracing institutionalization. The new "millennial" investors trust investment institutions and those well-known fund managers more. According to Tonglian data, as of December 2020, the number of public funds was 7,913, an increase of 766% from the number in 2011.
In the past year, China's Shanghai Composite Index has grown by 22.7% annually. The environment of China's capital market has gradually matured, and the enthusiasm of retail investors has gradually warmed up. According to data from the Economic Observer, half of the new Chinese retail fund investors are post-90s "millennials". What is interesting is that investment is not only a financial product for them, but also a social tool. Public offering fund managers with excellent performance on Weibo are also sought after by netizens. For example, on January 25, E Fund Blue Chip Selection managed by Zhang Kun also made the headlines of major media because of its heavy position in liquor. The net value rose by 5.05% in a single day. Major social media spontaneously organize fan clubs of these fund managers, which is dubbed the "fan circle" of fund retail investors.
The United States and China are the two most active economies, and their capital market participants are going through two completely different stages. These millennials are becoming the backbone of the market and will have an important impact on future asset prices and market development .
The U.S. capital market has a long history, and Wall Street institutional investors and regulators have rich experience. However, the GME incident highlights that hedge funds have long enjoyed institutional bias and the advantages of Wall Street network information, and are once again questioned by ordinary traders and the public. Just the beginning. In the 12 years after the 2008 financial crisis, from the financial crisis to the inflation caused by the release of water by the Federal Reserve, the attitude of the younger generation of Americans towards Wall Street has changed from yearning to disgust. However, China's new investors are in the early stage of "institutionalization" and have more yearning for new investment methods and professional services.
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