The number of private investors is growing in China

China goes global – what can we expect from rising Chinese outward investment?

The number of private investors is growing in China

The number of registered investors in China has exceeded the number of members of the Communist Party. This was facilitated by the policy of economic stimulation and the prospects for improving trade relations with the United States..

According to the Central Clearing Center of the China Securities Industry (CSDC), as of last January, the registered accounts of holders of RMB-denominated shares, increased by 8.8% to $ 160.6 million. 

«The stock market forecast remains bullish even if markets take a short time to recover due to the coronavirus outbreak», – said Xun Yugen, strategist at Haitong Securities in Shanghai. 

«If the epidemic is brought under control, economic activity will resume in March. Corporate income growth is expected to accelerate in the coming quarters as the government gives the green light to stimulate the economy», – he noted.

China opened 800 thousand accounts for trading RMB-denominated stocks each month from November to January last year.

The number of registered fund investors for the first time exceeded number of members of the Chinese Communist Party in 2015.

The rapid growth of market participants underscores why China, with $ 30 trillion in national household savings, is so attractive to brokers and bankers. The reason lies in exploiting the rapidly growing consumer demand and the increase in the country’s middle class. Blackrock, JPMorgan Chase & Co., Nomura Holdings are just a fraction of global financial institutions looking to expand in mainland China.

The number of private investors is growing in China

The sheer number of traders also explains why Chinese securities regulators are keen to maintain floating share prices, especially in the one-way market where short selling is highly regulated..

With a capitalization of 62 trillion yuan, China’s stock market is already the second largest in the world, behind only the United States.. However, private investors spend 70% deals every day. This is a higher share than in Hong Kong, where institutions dominate 80% of transactions and retail investors participate in only the remaining 20%..

In recent years, China’s securities regulator has sought to contain market volatility by encouraging more institutional involvement, establishing exchange links with Hong Kong to increase foreign investment, and liaising with global index compilers to improve the representation of mainland stocks in their valuations..

The Shanghai Composite is already down 2.5% this year as the outbreak of Covid-19, a new strain of coronavirus, dampens investor sentiment and adds fears that the epidemic will disrupt economic growth by limiting retail spending..