Stock market needs to grow up

It really looks like it's winter in the stock market. The benchmark index surged from a low at around 2047 in September 2012 to peak at 2478 in March, despite occasional faltering. Since then, the index has led back to below the 2300 level while the many overseas markets are scaling new heights.

But not everyone is hung up in uncertainties. Some analysts are recommending stocks in the petrochemical, electricity, commerce and food processing sectors, contending that they stand the best chance of benefiting from the economic shift from external trade to domestic demand. They are also advising investors to avoid, at least temporarily, banks and property companies because they are the most exposed to the uncertainties of the economic adjustment policies.

Such policies should present exceptional opportunities for investors who are confident about their capabilities to look into those sectors that other investors are shying away from. Take the banking sector. To be sure, financial reform, especially the liberalization of interest rates, could result in the narrowing of spreads from which most banks derived the bulk of their earnings. But some banks are better positioned than others in restructuring their asset bases to take advantage of the progressive opening of the capital markets and the internalization of the renminbi.

Many investors have been blaming the government and everyone else rather than themselves for their stock market losses. These investors should never have gone into the stock market in the first place. They can do themselves a favor by just keeping their savings in banks.

The faster pace of change in the economic landscape in coming years will make it even harder for the average investors who are used to buying and selling on rumors and hearsay to make money in the stock market. Greater transparency resulting from market reform can help ensure that share prices are influenced more by corporate performance and economic fundamentals than investors' herd instinct. That's maturity.

The author is a current affairs commentator.