Chinese Retail Investors Flock to Micro-Cap Stocks Amid Broader Market Struggles
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Micro-cap stocks in AI and other hot concepts have shined this year, while China's broader market has struggled. Retail investors are speculating on these stocks.
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The Wind Micro Market Cap Index is up 37% YTD, compared to an 8% loss for the large-cap CSI300 Index.
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Regulators seem accepting of speculative trading in micro-caps to prop up the market, worrying some investors long-term.
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Retail investors like picking concept stocks tied to AI or Huawei that are easy to "stir-fry" or pump up.
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Some brokerages now recommend micro-cap stocks as part of a new investment strategy amid anaemic growth and global risks.
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