Date
24 October 2017
Individual investors with stocks worth below 500,000 yuan represent over 90 percent of total investors, but  they make up for less than 10 percent of the total market capitalization. Photo: Reuters
Individual investors with stocks worth below 500,000 yuan represent over 90 percent of total investors, but they make up for less than 10 percent of the total market capitalization. Photo: Reuters

How hard did the market plunge hurt Chinese investors?

Chinese investors have suffered massive losses during the recent market meltdown. 

Each account lost as much as 420,000 yuan (US$67,630) on average within two weeks since June 15, according to data from 50.77 million accounts registered with the China Securities Depository and Clearing Corp. Ltd.

The Shanghai Composite Index plunged 32 percent during 17 trading days between June 15 and July 8. The market has started to stabilize after Beijing unveiled a set of supportive measures to stem the sell-off.

However, the A-share market capitalization only dropped 7 percent in June from previous month. As many as 20 million accounts did not perform any trading during the market crash, while 2.13 million accounts worth 500,000 to 5 million yuan were wiped out. Nearly 30,000 accounts worth over 5 million lost everything, too.

Trading was very active until mid-June. But non-trading accounts increased from 12.56 million to 21.04 million during the five weeks between June 1 and July 3. Investors largely stayed on the sidelines in late June because of the volatile market situation.

Among individual investors, 92.1 percent have stocks worth below 500,000 yuan, while 7.5 percent of the medium-sized investors have accounts worth between 500,000 and 5 million yuan. Only 0.4 percent have accounts worth over 5 million.

In a retail-dominated market, investors with stocks worth over 100 million yuan account for nearly 70 percent of the total market capitalization. That means A shares are dominated by institutional investors in terms of liquidity.

Individual investors with stocks worth below 500,000 yuan represent over 90 percent of total investors. But they make up for less than 10 percent of the total market capitalization.

By contrast, institutional investors and big players with over 100 million yuan investment account for 0.03 percent of total investors. But they hold up to 70 percent of the total market.

How has the market plung affected small and big investors?

By the end of May, the number of those who have 500,000 yuan worth of stocks increased by 4.2 percent from the previous month, while the number of those with more than 500,000 yuan of stocks soared by 11.6 percent.

One month later, the former group has jumped 10.2 percent, while the latter dropped by 5.8 percent. The number of stock accounts worth over 5 million dropped by 29,114 in June.

Small investors may be less sensitive to stem losses than their deep-pocketed counterparts.

This article appeared in the Hong Kong Economic Journal on July 20.

Translation by Julie Zhu

[Chinese version中文版]

– Contact us at [email protected]

CG

Senior investment banker

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