Despite the corona crisis: This is why millions of new investors entered the Chinese stock market in 2020 | message
indices in this article
Chinese indices with strong growth despite Corona
Millions of new traders are pouring into China’s stock exchange
Chinese companies dominated the IPO market in 2020
The year 2020 was particularly moving for the stock markets. The rapid spread of the coronavirus has caused some major upheaval within a very short time. On the one hand, the historic collapse at the end of March will be remembered by one or the other. On the other hand, however, the creeping rally with which the stock markets fought back to their pre-crisis levels and finally to new record levels by the end of the year and beyond is at least as remarkable. Despite the corona crisis, the Shanghai Composite posted an overall increase of 13.87 percent in 2020, but the growth of the Shenzen Composite of 35.2 percent is even more impressive. The German leading index DAX can hardly keep up with a moderate gain of 3.55 percent.
Mainland China attracts millions of new investors
As a study shows, however, not only the indices, but also the underlying exchanges of mainland China recorded impressive growth in the past year. What is meant is the large number of new investors pouring into the Chinese stock market. According to CNBC’s data from China Securities Depository and Clearing Corporation, mainland China would have gained 18.02 million new investors in 2020, bringing the total to 177.77 million accounts. December in particular turned out to be a record month, with an increase of 1.62 million new investors. After 809,300 new investors in the previous year, this amounts to doubling. The securities depository only deals with trades on the Shanghai and Shenzhen exchanges.
Lockdown measures and IPOs
This renewed will to try one’s luck with stocks is likely to be due to several factors. CNBC suspects that the strict lockdown measures have to do with the strong growth in the number of new investors. By spending more time at home, people in China may have more time to deal with trading. In addition, the supply of shares on the Chinese stock exchanges also increased sharply. Last year in particular, the market was literally flooded by new issues.
As the auditing firm EY found, Chinese companies would have dominated the global IPO market in 2020. According to EY, the Shanghai stock exchange had the most IPOs, followed by the US tech stocks stock exchange NASDAQ and the Shenzhen stock exchange. In addition, half of the top ten biggest trade shows in 2020 would have consisted of Chinese companies, which would also have topped the list. A trend that, according to William Ma of Noah Holdings (Hong Kong), should continue in 2021, according to CNBC’s Squawk Box Asia late last year.
The mainland Chinese stock exchange appears to be going up just as steadily in 2021. According to data from Wind Information, eleven of the first 13 trading days in 2021 would have traded more than one billion yuan, CNBC writes. It now remains to be seen whether this trend will continue in the longer term.
Finanzen.net editorial team
Image sources: iStockphoto, Aleksey Klints / Shutterstock.com