Day trading, done overnight, grows in China

New York Times (Beijing): Before the opening bell sounded on the New York Stock Exchange (NYSE) on a recent Tuesday, a group of fresh college graduates clocked in at a small trading firm on the outskirts of this capital city.

They were hired to engage in rapid-fire stock trading with some of the world’s most powerful investment houses in New York, London and Tokyo, and they were instructed to be alert.

“The market could be volatile today,” King Chan, the General Manager at the firm, Lazer Trade, shouted to the group during a pep talk. “Be careful at the open. And don’t take dumb risks!”

Chan’s day trading shop is one of many that have sprung up in and around China’s major cities in recent years. Trading firms based in the US and Canada are recruiting inexpensive workers in China and teaching them to engage in speculative trading — which means repeatedly buying and selling shares listed on the NYSE and Nasdaq, hoping for quick profits.

By some industry estimates, as many as 10,000 people in China are doing speculative day trading of American stocks — mostly aggressive young men working the wee hours here, from 9:30 p.m. to 4 a.m., often trading tens of thousands of shares a day.

“Trading groups have exploded into China,” says Stephen Ehrlich, Chief Executive at Lightspeed Financial, a New York company that sells trading software to firms operating in China. China prohibits its citizens from using Chinese currency to buy or sell shares of companies listed on foreign stock exchanges, though there appears to be no prohibition against trading stocks for an account owned by a foreign entity.