Retail investors are key to sustaining China’s stock-market rally

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policies with Donald Trump as president. Retail investors in China shied away from stocks as markets dropped in 2022 and 2023, but they’ve been roused awake this year by Beijing’s efforts to bolster the economy. In early October, the Shanghai Composite Index hit its highest level since February 2022 and is now up 11% for this year, while the CSI 300 Index, which represents the largest Chinese companies, is 14% higher.

That’s probably thanks to retail investors. China’s stock market is unique in that it is dominated by its 200 million retail investors, who have been heading back to equity markets given the dearth of attractive investment opportunities amid falling interest rates. Chinese households have been hoarding cash since the pandemic.

Strict lockdowns dented the world’s second-largest economy and hammered consumer confidence, lifting savings even after Covid-related restrictions were eased. Households deposited an extra $6.2 trillion during the pandemic as they saved more and shied away from equities and property investments, according to Goldman Sachs estimates. Central bank data showed that helped grow bank deposits to $20 trillion by September—almost double the capitalization of China’s Shanghai and Shenzhen stock markets.

But the tide could be turning. Mainland Chinese investors opened 6.85 million brokerage accounts last month, a threefold increase from September, China’s central bank data show. At the same time, household deposits fell by nearly $79 billion, prompting analysts to say some of those