China’s stock markets reopen after holiday

China stock market up 27% in 1 month! For how long this rally will sustain? Expert's takehttps://t.co/iTyshYVVF0

— ET NOW (@ETNOWlive) October 8, 2024

Young investors in China are jumping into the stock market, hoping to capitalize on the biggest rally in nearly two decades. The surge in new accounts among people under 30 on popular trading apps and the flood of questions from first-time investors to brokerage firms highlight the newfound enthusiasm for investing. These new investors are taking a significant risk, as the recent gains have been driven by changes in policy and depend on further government actions to support the economy.

LIVE | Steve Englander of Standard Chartered Bank shares insights on China market reopening after a week-long break@StanChartIN @_anishaj @AyeshaFaridi1 @avannedubash https://t.co/m7sBMwhfEG

— ET NOW (@ETNOWlive) October 8, 2024

The volatile nature of the market was evident on Wednesday when stocks traded sharply lower after rising 6 percent the previous day. For many young people in China, the decision to invest marks a significant shift from the dismal economic conditions they have experienced in their adult lives. The fear of missing out on potential gains has replaced the fear of exposure to a stagnant stock market.

Young Chinese have jumped into stock trading in the past two weeks since Beijing took its most aggressive steps yet to revive economic growth and persuade consumers to start spending.
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— John Liu (@JohnLiuNN) October 9, 2024

Tan Zhiming, an account manager at Northeast Securities, noted the surge in new customers opening accounts, with most of them being newcomers to investing. As onshore markets reopen after a week-long holiday, brokerages and stock exchanges in China are preparing for a busy trading session. Optimism is running high that Beijing’s stimulus measures will further boost shares. Professionals in various departments at local brokerages have canceled their holidays to handle the expected surge in activity.

JUST IN 🚨: Chinese Stocks blasting higher by more than 10% and on track for best day in decades 🚀 pic.twitter.com/mePLZ0oYlh

— Barchart (@Barchart) October 8, 2024

Major brokerages have reported record-high account openings during the Golden Week break, with overwhelming client demand both online and offline. Employees at the China Securities Depository and Clearing and stock exchanges have also worked through the holiday to prepare for the influx of new accounts and to test their systems. The rally in Hong Kong shares during the holiday has added to hopes that the onshore rally will continue.

Young Chinese investors jump in

Retail investors across China are once again discussing stocks at family gatherings, with many looking to buy shares after years of inactivity in their trading accounts. Authorities are taking steps to ensure smooth trading and avoid glitches like those experienced in late September. The latest data suggest that efforts to revive the property sector are showing results, with sales of new homes jumping in cities like Beijing and Shenzhen. However, some investors remain cautious, haunted by previous false dawns in the market. Investors are awaiting a press briefing by China’s top economic planner on Tuesday to discuss policies aimed at boosting economic growth. The onshore market is expected to perform well, driven by sentiment and the fear of missing out. The A-share market’s robust recovery, supported by stronger-than-expected stimulative policies, has increased investor confidence. The Shanghai Stock Exchange has announced an extra trading window to accommodate the surge in newly registered retail investors and improve trading efficiency. Securities brokerages have reported significant increases in account opening requests, with some providing round-the-clock online services during the holiday. Investor confidence has been bolstered by the A-share market’s recent strong rebound, with the Shanghai Composite Index and Shenzhen Component Index posting substantial gains. Experts believe that Chinese household savings could provide more capital for the A-share market, fueling further upward momentum. The Hong Kong stock market has already overtaken the A-share market due to fewer holiday days, suggesting a continued rally for the A-share market is likely. While analysts caution about potential market adjustments and fluctuations, they affirm that the bull run is far from over, indicating an extended rise in the market.