Caixin
Jul 08, 2020 07:06 PM
FINANCE

Investors Rush to China’s Stock Market as Bull Rally Continues

An investor watches the day’s share prices Monday at a stock trading hall in Nanjing, East China’s Jiangsu province.
An investor watches the day’s share prices Monday at a stock trading hall in Nanjing, East China’s Jiangsu province.

Mom-and-pop investors in China are rushing to open trading accounts to buy shares as the bull market rally continues, fueled by relaxed monetary policy and the recovering economy.

On some brokerage platforms this week, individual investors have been queuing to open accounts.

“A large number of investors have opened accounts recently,” a source at a Shanghai-based brokerage told Caixin on Monday, saying that there were still more than 100 people lining up online to open accounts at about 10 p.m..

The stock market on the Chinese mainland started recovering around the beginning of the second quarter this year after plunges in the first three months. The turnaround in market sentiment has been spurred by eased monetary conditions and a recovering domestic economy after the fallout from the Covid-19 pandemic, multiple analysts said.

The benchmark Shanghai Composite Index closed up 1.74% on Wednesday, rising for the seventh trading day in a row. The mainland entered a technical bull market on Monday.

Individual investors as well as institutions have been flocking to the stock market. Turnover has surged and investors have used larger amounts of borrowed money to buy in.

Overseas investors have also showed greater interest in the Chinese mainland market as the flood of liquidity from central banks abroad has fueled their mainland share purchases through Hong Kong’s stock links.

Stock chart-1

Individual investors have also put more money into publicly offered funds that focus on stock market investment. On Monday, a new fund managed by China Universal Asset Management Co. Ltd. closed its fundraising four days ahead of schedule due to investors’ rush buying, according to a company statement (link in Chinese).

“The market is warming, but is not too hot,” said an investment consultant surnamed Chen at brokerage China Securities Co. Ltd.

Contact reporter Guo Yingzhe (yingzheguo@caixin.com)

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