Millions of new investors piled into mainland Chinese stock markets in 2020

An investor looks at an electronic board showing stock information at a brokerage house in Nanjing, Jiangsu province, China.


BEIJING — More Chinese investors are piling into the local stock market.

In December, the mainland stock market recorded 1.62 million new investors — double the 809,300 reported a year ago, according to China Securities Depository and Clearing. The organization handles trades for the Shanghai and Shenzhen stock exchanges.

For all of 2020, new investors increased by 18.02 million to 177.77 million, the data showed. That’s about 1.5 million new accounts a month.

The surge of interest comes as many people around the world turned to stock trading while being stuck at home due to the coronavirus pandemic.

The new investor accounts in China come as mainland stocks soared last year, with some becoming the best performers in the world.

For example, the Shenzhen component climbed 38.7% and the CSI 300 rose 27.2% in 2020, compared to to gains of 16.26% for the S&P 500. The CSI 300 tracks the top 300 stocks on the Shanghai and Shenzhen exchanges.

Investors also had more Chinese companies to choose from as new listings flooded the market.

Mainland China and Hong Kong accounted for 40% of the world’s initial public offerings last year, according to Ernst & Young.

The Shanghai Stock Exchange, with its main board and Star market, ranked first in the world with 233 IPOs, the study said, adding that Shenzhen came in third, just after the Nasdaq in New York.

Surge of mainland purchases in Hong Kong

Chinese investors were also eager to buy stocks in Hong Kong, where many of China’s biggest and most popular companies are listed, such as Tencent and Meituan. Others like held secondary listings in Hong Kong last year.

The Chinese government wants to keep the country’s giants closer to home. Political pressure for Chinese companies to delist from U.S. markets increased last year.

Reflecting interest in these Hong Kong-listed Chinese stocks, data from Wind Information showed net purchases through the Shanghai “connect” program more than doubled from a year ago to 334 billion Hong Kong dollars ($43.09 billion). Meanwhile, purchases through the same program in Shenzhen more than tripled to 338.11 billion Hong Kong dollars.

The stock connect programs launched in the last five years allow mainland investors to trade some stocks in Hong Kong.

In contrast, net purchases of Shenzhen and Shanghai stocks from Hong Kong fell slightly in 2020, according to Wind.

Chinese stocks climb in 2021

Chinese interest in local stocks has remained high so far this year, with trading volume for the mainland-listed A-shares surpassing 1 billion yuan ($154.32 million) on 11 out of the first 13 trading days of 2021, Wind data showed. A-shares are yuan-denominated stocks of Chinese companies listed in mainland exchanges in Shenzhen or Shanghai.

Chinese markets have seen strong gains this year.

The Shanghai composite topped the psychologically key 3,600 level to hit a five-year high on Thursday, while the Shenzhen component climbed another 7% this year from its 2020 gains. Meanwhile, the CSI 300 has soared to levels not seen since January 2008.

Source: CNBC