New investors in China are opting for the local stock market for their debut. China’s dominance in the global market is attracting more new investors to opt for the mainland stock market. Accordingly, the market might not tumble easily even in 2021.
A surge in new investors, majority opts for China market stock
In 2020, China recorded additional 18.02 million of new investors. Hence, the country accumulated around 177.77 million investors in total with an average of 1.5 million new accounts a month.
Accordingly, China Securities Depository and Clearing noted that around 1.62 million new investors in December alone entered the mainland stock market. As a note, the organization is responsible for Shanghai and Shenzhen stock exchanges’ trades. The number doubles the previous year’s record at around 809,300, CNBC notes.
Pandemic-led lockdowns are suspected to trigger the skyrocketing number of new investors. Along with China stock market’s prominence during the pandemic, more new investors started to opt for mainland stock. In 2020, Shenzen component managed to bring 38.7%. Likewise, CSI 300 ticked 27.2% higher. In comparison, the S&P 500 gained 16.26%.
China stock market was also a heaven for new listings. Ernst & Young noted that China and Hong Kong took over 40% of the world’s initial public offering in 2020. The Shanghai Stock Exchange managed to beat Nasdaq New York in topping the world’s list with 233 IPOs in 2020, combining both the mainboard and Star market. Shenzhen sits right behind the two in the third rank.
Chinese stocks might surge more in 2021
The surge of new investors might not die down in 2021. According to CNBC, trading volume for the mainland-listed A-shares has exceeded 1 billion yuan ($154.32 million) in just 11 trading days of 2021. A-shares itself contains yuan-denominated stocks of Chinese companies which are listed in Shenzhen or Shanghai exchanges.
China is also still winning in the global market. The Shanghai Composite has just peaked a five-year high last Thursday. Meanwhile, The Shenzhen rose 7% from its 2020 gains. Likewise, CSI 300 recorded a level surge that was last seen in January 2008.
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