China’s stock market turnover sinks to 4-year low as investors fret over stimulus

The daily turnover on China’s onshore markets has slumped to the lowest in four years, indicating investors are awaiting clearer signals on the policy front to support the economy, before risking more money on the table.

The combined value of shares changing hands on the Shanghai and Shenzhen exchanges slid to 472.9 billion yuan (US$66.1 billion) on Wednesday, the least since May 25, 2020, according to Bloomberg data. The average daily turnover stands at 610 billion yuan this month, and 798 billion yuan this year.

In Hong Kong, trading slumped to HK$68 billion (US$8.7 billion) on Wednesday, a six-month low, the data showed.

The subdued trading mirrors subsiding interest in Chinese stocks, as investors are underwhelmed by cuts to a policy loan rate and the loan prime rate following a Politburo meeting last month that highlighted the urgency of achieving the country’s economic growth target of around 5 per cent this year.

“Falling market turnover is a reflection of the slumping sentiment among investors,” said Song Yiwei, an analyst at Bohai Securities in Tianjin. “Whether the market will rise in the future depends on the scope of growth-stabilising policies and the pace of reforms.”

The slump in turnover has also coincided with the unwinding of leveraged stock purchases, a measure of market sentiment particularly among active traders. The outstanding value of stocks bought with borrowed money has hovered around a six-month low of 1.4 trillion yuan this week, according to Bloomberg data.