Young people in China 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.
On one popular online stock trading app, new accounts surged among people under 30. An account manager at a brokerage firm in China’s northeast was flooded with questions from first-time investors. University students spent their Golden Week holiday break last week reading up on investment advice.
These new investors are trying to get a piece of the biggest rally in nearly two decades. But they are taking a big risk: The gains have been driven by the changes in policy and will likely depend on the government taking further actions to support the economy.
And markets will be on a hair trigger. On Wednesday, after rising 6% the prior day — the 10th straight day of gains — stocks in China opened lower.
The frenzy to invest is a dramatic departure for people in China born after the turn of the century. A dismal economy has been the status quo during their adult lives. But now, the fear of exposure to China’s stagnant stock market has been replaced by a fear of missing out, despite the risks of investing in a volatile market.
“There have been so many customers opening accounts in the past couple of days, and most of them are newcomers,” said Tan Zhiming, an account manager at Northeast Securities, a brokerage firm in Changchun.
Tan said he had received such a high number of inquiries from people new to the stock market — on some days up to 30 — that he wrote a boilerplate list of advice for beginners. Start small with a low-risk bet like an exchange-traded fund, he told them, and don’t spend the money you need to pay the rent or buy food.
China’s economy has struggled to rebound from crippling lockdowns during the COVID pandemic. In the years since, there has been little cause for optimism. The unemployment rate for people 16 to 24 got so high that the government stopped publishing it. Until recently, Chinese stocks were some of the worst performing in the world.
But at the end of September, the Chinese government announced a series of measures that sent the country’s stocks soaring and led to the biggest weekly gain in nearly 16 years. Trading volume was so high on Sept. 26 that the Shanghai Stock Exchange experienced delays in processing transactions. On Tuesday, when markets reopened after the weeklong holiday, mainland Chinese stocks initially jumped over 10% before losing some steam to end the day nearly 6% higher.
A computer science student in the southern province of Guangdong who asked to be identified by only his surname, Chen, said he had previously paid no attention to the stock market. But the late-September buzz was impossible to ignore.
While his classmates returned to their hometowns during the holiday last week, Chen, 20, spent his break studying the basics of investing.
On Xiaohongshu, a social media app similar to Instagram, Chen described himself as “a newbie diving into stock trading, dreaming of striking gold on their first try.” He planned to use his scholarship money, a few hundred dollars, to invest once prices cooled off.
“For people like us with just a few thousand yuan, there’s not much to lose,” Chen said. “I’m not going to wait until I’ve fully learned everything before I start investing.”
Many young people have turned to online stock trading platforms like Futu and Snowball, where they can get started within a day or two. On Tiger Brokers, which enables investors to access Chinese stocks that are listed in Hong Kong, the number of users under 31 increased 77% in the days following the government’s announcements versus the week before, the company said.
Bella Chen, a sophomore studying business in Guangdong, said she was worried that some new investors were making uninformed decisions.
Bella Chen, who posted on social media about her investments in mutual funds, said she warned her followers not to get caught up in their emotions when making investments. But some of them told her they would just buy anything she bought, she said.
“Honestly, I think this phenomenon is a bit crazy,” Bella Chen said. “It seems like many only see ‘the bull market is here, I need to make money’ without fully recognizing the risks.”
As confidence in traditional investments like real estate has continued to falter, young Chinese people have felt they have few investment options. Some purchased tiny beans of gold.
“A lot of people have been waiting to put their money into the market,” said Vey-Sern Ling, an equities adviser based in Singapore at the private bank Union Bancaire Privé. “Finally now they have an opportunity to do so.”
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