Commentary: This bad movie is a good guide to China’s stock market

In China, where investors are constantly on the lookout for a market bull, a new low-budget animated film called Niu Lai ("Here Comes the Bull") has become an unexpected hit. The 86-minute animation follows a calf named Niu Lai on his journey through an abstract dream sequence, encountering various animals and learning life lessons. Despite its poor quality, the film has grossed over 25 million yuan at the box office, becoming a meme for both young audiences and retail investors.

The film's themes resonate with the Chinese stock market, where individual investors often chase momentum stocks and over-rely on technical analyses. Like Niu Lai, who is bitten by a snake and becomes fearful of it, many have lost faith in the validity of these technical indicators. In the past decade, strong technical patterns have followed negative 20-day returns 55% of the time during macroeconomic downturns.

The film's characters, such as the mysterious cobra and the young leopard, symbolize the K-line chart and the sharp spike up that Niu Lai befriends. Their struggles mirror the experiences of Chinese traders, who face predatory market conditions and "dead-cat bounces." The movie's symbolism and dark humor have provided a source of dark humor for investors, who can now see reflections of their predicament in the film's narrative.