Stocks rebound but for many Chinese, all is lost

BEIJING -- Asian stock markets rebounded Thursday, led by gains on China's Shanghai stock index after the government stepped in to stop a massive slide.

CBS News correspondent Seth Doane says it was a much-needed bit of good news in Beijing, as the government continued to work feverishly to shore-up markets. Still, half of all listed companies on the index have suspended trading -- freezing about $3 trillion worth of stock.

Despite the upswing, there were no sighs of relief and no smiles at the Beijing trading hall CBS News visited Thursday, as investors gazed at savings lost, or stuck in government-mandated limbo.

China's government has banned major shareholders and executives from selling shares, and a $19 billion "market stabilization fund" was set up to buy stocks.

"I would call this a major stock market catastrophe," Zhang Guoqiang told CBS News. "We have never seen anything like this."

Zhang, a retired electrician, was among the many small-time investors trying to buy and sell stocks at the trading hall, which resembles a dingy gambling parlor.

More than 80 percent of the 90 million-plus Chinese playing the market are average citizens. Many in the trading hall on Thursday covered their faces with newspapers and shawls when the CBS News camera was switched on. They didn't want to talk, and the reasons were quite clear: they've lost a tremendous amount of their money.

Some told Doane off-camera that they'd lost anywhere from 30 to 70 percent of their savings. One man told us quite simply that his heart was broken.

Many were urged by the government to get into the stock market.

"That is real money," Peng Lixin, a retired manager of a recycling company, lamented. "Those are real fortunes being lost in there... within one month the situation came to this."

"A lot of people have been talking about a bubble in the Chinese stock markets for a while and saying it was inevitably going to burst," Gillian Tett of the "Financial Times," told CBS News. "But not many people expected the kind of crash we've seen in the last couple of weeks."

Peng told Doane he felt the government had done all it could do, but it remained to be seen whether those measures would work.

"The government can try to order investors to stop trading," explained Tett, "but it can't order people to start believing in the future or get confidence back in the markets again."

If the drastic measures taken fail to shore up stock prices, said Tett, it could shake some Chinese citizens' confidence in the all-powerful Communist Party.

"A number of investors and ordinary Chinese (are) waking up and realizing that sometimes the Chinese government isn't all powerful," she said. "They've thrown everything at this. They're pulling out emergency measures everywhere, and if these don't work to stabilize the market, the question people are going to start asking is, 'does the Chinese government actually have control over the rest of the economy?'"