Why Chinese retail investors find WallStreetBets so familiar

The retail investors on Reddit channel r/wallstreetbets have caused an uproar in the stock market, forcing hedge fund Melvin Capital to take huge losses, and probably Citron Research to stop shorting.

Some of you probably noticed that amongst Chinese retail stock investors, a sense of familiarity is sinking in. Many have seen ‘gurus’ leading groups of retail investors on a charge, usually resulting in what they call “一地鸡毛” or “Chicken feathers all over the floor”, i.e. a very messed up situation.

A famous case years ago was that of Wang Xiujie (王秀杰), a self-styled 带头大哥 (“Leading Big Brother”) who ran dozens of QQ (a Chinese instant messaging app during the web era – and the first product of Tencent) groups. Retail investors pay to join such groups, where he would give out advice or even orders for them to charge on specific stocks.

In 2007, Wang was arrested for running an unlicensed business and disrupting market order. He was subsequently sentenced to 3 years in prison and a CNY 600k fine.

There were many like Wang then and even now. They usually lead investors to buy stocks with dodgy or fishy fundamentals. Many of them take the pump and dump approach to “cut the chives”, as retail investors are, not so affectionately, known in China.

Wang became more famous because he used the name Leading Big Brother, which came from Jin Yong’s famous martial arts fiction Demi-gos and Semi-devils. In the fiction, the Leading Big Brother led a group of martial artists to murder the father of the protagonist Xiao Feng, in the big backdrop of Song-Khitan conflict.

Xiao Feng spent his life looking to avenge, and although the author did not reveal in the novel, people widely believed the that Leading Big Brother was the Abbott of Shaolin Monastery – famous for its militant monks. The feature image of this article came from one of the many TV interpretations of this popular fiction.

In the fiction, most of the followers of the Leading Big Brother, though, were killed on the spot during the assault.