Without that retail bid, the A-share blue-chip CSI 300 index .CSI300 is up just 17% since late October, while the Hong Kong-listed H-share Hang Seng China Enterprises Index is up 44%.
Vinnie Wu, China equity strategist at BofA Securities, says there is room for further gains in stocks but if investors exercise caution, “the market could become volatile in case of a bearish trend”.
Lei Meng, China equity strategist at UBS Securities, said retail investors are waiting for clear policy signals.
“Some investors are closely monitoring the strength and pace of economic reform this year while awaiting policy signals from the coming two sessions,” Meng said, referring to the annual parliamentary gathering in March.
calls for a brighter outlook
Whether “Generation Z” or retirees, investors said they are optimistic but plan to invest more only if the economic outlook brightens.
As of now, I have no plans to invest in the stock market, says Lee, a 40-year-old investor. Money can go in, but can never come out.
Others will hold their purchases steady, like Sun in her 30s, who said she will stick with her current automatic investing plan and not change her investments in 2023.
Analysts caution that even overly optimistic views on easing asset and technology regulations are reason for investors to be cautious.
“We expect growth to slow down somewhat in the second half of this year,” said Ting Lu, chief China economist at Nomura.
Highlighting risk aversion, Chinese household deposits are set to rise to a record 17.8 trillion yuan ($2.61 trillion) in 2022, surpassing an increase of 9.9 trillion yuan in 2021.
Zhou, a Shanghai-based investor in his 50s, is choosing certificates of deposit over stocks because they are less risky and less volatile. “We can’t put all our eggs in one basket,” he said.
Eventually, though, excess deposits are likely to end up in the equity market once households reduce risk aversion, said Wei He, China economist at Gawkel Dragonomics.
“Hence the cash deposited in bank deposits is more likely to go back into financial assets than into excess consumption,” he added.