China retail investors scramble back to the stock market: ‘I don’t want to miss the boat’

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Individual investors from China have scurried back to buy risky shares, but historically, wild swings in sentiment have foreshadowed plunges

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A screen displayed financial information in Shanghai. Photo: Bloomberg

Zhang Shidongin ShanghaiandDaniel Renin Shanghai

Published: 11:30am, 1 Oct 2024

Individual investors from China have scurried back to the stock market to buy riskier assets, fearing they might get left out of a rally that some money managers say is akin to a raging bull run a decade ago.

While there is no official data on retail buying, some anecdotal evidence shows that the nation’s pool of more than 200 million investors – the largest cohort of its kind globally and a bit smaller than the population of Brazil – were chasing returns from a run that drove China’s benchmark up by more than 20 per cent in the final week of September.

Joy Yang, a 47-year-old executive at a pharmaceutical company in Shanghai, bought stocks before the weeklong holiday that started on Tuesday. In her first foray into equity investment since a US$5 trillion market meltdown in 2015, she bought property developers and exchange-traded funds after seeking tips from friends.

“Everyone is buying stocks now and that’s becoming a nationwide phenomenon,” she said. “Why not buy some stocks now? I don’t want to miss the boat.”

Sentiment among individual investors has turned positive since China signalled its pivot to policy easing last week. A readout from a Politburo meeting chaired by President Xi Jinping on Thursday hinted at expansionary fiscal stimulus and pledged to put a floor under property prices. Earlier in the week, the People’s Bank of China unveiled a monetary easing package including 800 billion yuan (US$114 billion) in new funding facilities for stock purchases as well as cuts in borrowing costs.

It was not long ago that Chinese investors were steering clear of yuan-denominated stocks due to worries about bleak growth prospects. Instead, they were putting their money into bonds, overseas equities or even luxury properties. But things have changed dramatically.