What’s new: Retail investors’ dominance of China’s stock market is continuing to shrink as institutional investors grow more active and individual players embrace concepts including value, long-term and rational investing, a top market regulator said.
In 2021, retail investors’ equity trading value dropped below 70% of total market value for the first time, compared with about 10% in the U.S., Li Chao, vice chairman of the China Securities Regulatory Commission (CSRC), said Thursday at a press conference.
As of the end of May, domestic institutional investors and foreign investors held 22.8% of total outstanding market value, an increase of 6.9 percentage points from 2016, Li said.
In the past decade, China’s stock market has expanded 238.9%, and the bond market has grown 444.3%, both ranking second in the world, Li said. There are more than 200 million investors in the Chinese stock market, making important contributions to serving the country's high-quality development, Li said.
Total assets of securities and futures companies increased 5.5 times in the past decade, and assets under management by public equity funds reached 26 trillion yuan, an eightfold increase in the past 10 years, Li said.
The background: Since the inception of the Shanghai and Shenzhen stock exchanges in 1990, China’s stock market was long dominated by individual investors. They tend to have shorter holding periods, which can contribute to high levels of turnover and market volatility.
To limit volatility and protect retail investors, China's equity market imposes daily price-change limits of 10% on ordinary stocks and 5% on special-treatment stocks. Shares on the Shenzhen Stock Exchange’s Nasdaq-like ChiNext board and on Shanghai’s STAR Market are allowed to rise or fall 20% daily.
This story has been corrected to reflect that the Shenzhen Stock Exchange was set up in 1990.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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