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China’s Stock Mania Lures Most New Traders Since 2015

China’s Stock Mania Lures Most New Traders Since 2015

China’s July stock surge lured the biggest intake of new investors in five years, and more people are expected to follow suit even as the rally’s momentum fades.

The number of new investors opening brokerage accounts -- almost all of which were individual traders -- reached 2.43 million in July, according to data released by China Securities Depository and Clearing on Wednesday. That’s a 57% increase from June and the largest number of traders to enter the market in a single month since the height of the country’s 2015 stock bubble.

China’s Stock Mania Lures Most New Traders Since 2015

The Shanghai Composite Index has jumped about 10% this year, making it the best performing major global index. Momentum has slowed since July’s surge, as investor confidence took a hit amid escalating tensions between Washington and Beijing. On Tuesday, President Donald Trump said he called off trade talks with China, throwing into question an agreement the two countries reached earlier this year. The gauge fell 1.3% on Thursday amid broad losses in the region.

Investor engagement nevertheless remains solid. Leverage is near the highest level since 2015 and daily trading volume has maintained levels above 1 trillion yuan ($144 billion) for most sessions this month.

“The high growth of new investors is expected to be maintained for a while, unless there is a major correction in stock market,” said Zhang Yankun, fund manager at Beijing Hone Investment Management Co. “A steady growth in the number of new investors will help boost trading volume and lend support to low-price stocks that are favored by retail investors.”

©2020 Bloomberg L.P.

With assistance from Bloomberg