• Mainland stock markets regain post-pandemic gains
  • Small investors are playing a big role, but they say they’re pulling back
  • Banks balloon while fleeing to safety

SHANGHAI/SINGAPORE, May 30 (Reuters) – China’s last big hopes for a post-pandemic economic recovery are fading. A group of domestic retail investors are bearish on equities, looking to double down on safer assets amid a sluggish economic recovery.

Brokers and wealth managers expect billions of yuan of surplus savings to flow into the stock market this year as the economy accelerates and there is still plenty of uncertainty over real estate. will be the only game.

But just as foreign currencies failed to materialize in China’s stock market, nervous households are also turning their backs and piling up bonds and deposits, and the stock market is drifting.

China’s blue chips (.CSI300) have bounced back after gaining 20% ​​from October to January, and are down 1% year-to-date. Hang Seng (.HSI) is at his 2023 lows, with sovereign bond yields falling. Easiest trading has been sluggish this year, and lost momentum is keeping investors’ money away.

“I’m very disappointed,” said Eric Yu, a programmer in his 30s who has been investing in Shanghai for about three years.

“I’m not going to put any more money into stocks until all my losses are recovered,” he said. Instead, they spend about half of their monthly income on wealthy people and savings products, terrified by tech layoffs and youth unemployment.

“Safety is more important at this point…I don’t want to lose my principal.”

Interviews with more than a dozen smaller investors show that sentiment is fairly widespread.

China’s smaller investors are also a very large force, accounting for about 60% of turnover, according to China Securities Regulatory Commission Chairman Yi Huiman, while in the US, JP Morgan estimates Less than 25% shows their lack of interest. in market data.

China’s securities margin trading balances, a measure of risk appetite, have hovered around a one-month low. Volume in the A-share market is at its lowest level since early March.

Data from the China Securities Depository Center showed that, although brokerage account openings were volatile, there was hope for momentum in February and March, but a similar decline in April. The launch of investment trusts, which represent investors’ interests, has also decreased.

The Shanghai Composite Index (.SSEC) is trading at the same level as early 2022.

“Stocks appear to be losing faith in China’s recovery narrative,” said Hong Hao, chief economist at Grow Investment Group. Unusually, he said, stocks are draining from longstanding correlations with deposits and liquidity.

nothing but wait

Investor enthusiasm is waning in the face of softening economic data and a global backdrop of rising political tensions and slowing growth.

China’s April industrial production and retail sales growth fell short of expectations amid a volatile economic recovery. Lending has fallen unexpectedly sharply as Western efforts to reduce their reliance on China for manufacturing gain momentum.

All of this has left domestic investors saying they are too nervous to do more than deposits, with central bank data showing deposits swelling even faster than at the height of the pandemic a year ago. It is shown.

“It’s quite difficult to grasp the investment opportunities because the themes are changing so fast this year,” said Wang Zaicheng, one such investor. “I have become more cautious … Sentiment is weak, and there are policy risks and geopolitical risks.”

Admittedly, not all signs are negative, and some see local investor returns ultimately being a big boost.

“Some market players estimate that 10% of excess savings could be invested in asset markets,” said Chi Loh, senior investment strategist at BNP Paribas Asset Management in Hong Kong. The amount will be about 800 billion yuan,” he said.

Hayden Briscoe, head of multi-asset management in Asia-Pacific at UBS Asset Management, said such investors would lift the market, adding that recent growth in non-bank lending is a positive sign that money is starting to flow into the economy. pointed out.

“The money is starting to come back,” he said.

But for now, its weight is on the sidelines. Even bright spots such as the outperforming state-owned sector reflect bond-like dividends rather than risk appetite, with attractive returns outside of the foamy AI sector.

“My stock portfolio is currently losing about 90%,” said Meng, a Shanghai resident in his 40s who gave only his last name.

In the past, I eagerly signed up for new stocks in hopes of a first-day price jump.

“I have to wait until it’s pitch black.”

($1 = 6.9121 Chinese Yuan)

It will be reported by Jason Xue and Winni Zhou in Shanghai and by Tom Westbrook in Singapore.Editing: Sri Navaratnam

Our criteria: Thomson Reuters Trust Principles.