Cover Story: Livestreamed Stock Tips Worry Regulators as Novice Investors Rush In

Rules need tightening as online influencers lead inexperienced investors into reckless trades

While livestreaming and social media have made it easier for stockbrokers to attract clients and offer trading advice, regulators are worried that these platforms are luring in inexperienced investors and making them prone to impulsive financial decisions.

“The pace is impossible to resist,” says Li, an executive at a mid-sized securities firm in central China. Each morning, he begins by checking the company’s livestream rooms, reviewing backend data and monitoring popular stock market streams.

To keep up with changing times, Li’s brokerage hired dedicated livestream staff and urged employees to get involved. “The A-share ecosystem has been transformed completely,” said Li, who started in the 1990s and now oversees his company’s brokerage business. “The financial industry’s traditional barriers — like the need for specialized education — have been shattered.”

Driven by government stimulus, China’s stock market has rebounded strongly since late September, after nearly two years of sluggish performance. The rally has attracted new investors, with Li’s firm seeing a wave of retail investor accounts opening. Almost all of these were created via online platform referrals.