With only two trading days left for the year and the benchmark Shanghai Composite Index hovering above 2,100, after a 22-percent dive over the past 12 months, small investors in the mainland stock market are bound to feel down as they bid farewell to 2011.

In fact they probably feel bitter, because few will have made any gains in such a bearish market, and there is still no light at the end of the tunnel, as economists forecast worse days ahead.

"If you think 2008 was bad, fasten your seatbelt for 2012," warns independent economist Andy Xie.

Yet so much doom and gloom is hard to fathom.

Yes, the world is undergoing an economic recession and risks a "double dip" following the 2008 financial crisis. But the Dow Jones has risen over 6 percent since the start of the year, despite the high unemployment rate in the United States and the slow recovery of the US economy. Stocks in Japan have also fared better than those on the Chinese mainland, despite the March 11 earthquake and ensuing tsunami, which dealt a severe blow to the country's economy. Among all the major economies, only the market in Italy has had a performance comparable with that of the Chinese mainland. But isn't that country struggling in the vortex of a deepening European debt crisis and about to go bankrupt?

China, on the contrary, is reporting robust growth and its exports, though hurt by weak external demand, still maintain double-digit growth. The country is expected to be the driver of the global economic recovery. Yet against this backdrop, China's small investors have each lost 42,000 yuan ($6,600) on average in the stock market in 2011.

There is just no logic to this.

The current measure of the Shanghai Composite Index is familiar to me. About 11 years ago I bought my first stock on the mainland market, and the next year, in June 2001, I saw the index peak at 2,245, before the market headed for a 5-year bearish circle.

The last 10 years have been a "lost decade" for China's small investors.

But so much has happened in the country's economy in the past decade. Its GDP has quadrupled to make China the second-largest economy in the world. Its exports have increased five-fold, turning the country into the world's largest exporter. If the stock market is in any way related to the general economy, I don't see that in China.

Some may point to the incomparability of the market now and then, citing differences in selection of sample stocks and expansion in scale. But it is an undeniable fact that the mainland market was, is, and will likely continue to be, a "wealth terminator" for small investors. As the saying goes, it is a magical place that can see investors "drive a BMW in, but ride a bicycle out; or a man wear a suit going in, but leave in just his underwear." I doubt whether Warren Buffett could survive in this market if he "bought and held" here.

Take my first stock for instance. I bought Handan Iron & Steel, a leading State-owned enterprise that was considered a blue chip, at about 8.2 yuan in 2000. The stock has not been traded since December 2009 when it was de-listed in a restructuring at 5.2 yuan. Yet taking all elements into account, inflation, dividends and newly issued shares, I would not have made any money even if I had held it for 9 years till its last trading day.

Ten years ago, top economist Wu Jinglian criticized China's stock market as a place worse than a casino because of its excessive insider trading and market manipulation.

"At least there are rules in a casino," he said.

Not much has changed in terms of protecting small investors' rights. As wealthier people quit stocks to buy property instead, the stock market has become a casino only for the poor, who cannot afford to speculate in real estate, as Andy Xie says.

Like an over-grazed pasture, China's stock market remains a place for random fund-raising to help cash-short State-owned enterprises. At least one IPO was launched each trading day in 2011 despite weak investor sentiment, making China lead the world in both the number of IPOs and the amount of capital raised.

A record in which small investors can take little pleasure.

The author is a senior writer with China Daily.

(China Daily 12/29/2011 page8)