The Shenzhen Stock Exchange (SSE) published a study on 15 May 2013 that analyses the behavioural change of investors in the Shenzhen market. It shows the continued heavy participation by retail investors, even as institutional investment accumulates more of the free-float.
It concludes that mid- and small-cap investors are still vulnerable, in what the exchange describes as the "eco-system of the stock market".
The SSE says that individual investors with capital less than CNY100, 000 showed the lowest return on investment among all investor classes, although it does not specify the exact returns by segment.
Its found that mid and small-cap investors prefer holding and trading highly speculative stocks. The average shareholding period for individual investors was only 39 days, which is much shorter than the 190 days for institutional investors (albeit higher than their 31-day average recorded three years ago). According to the report, "stocks with strong volatility and brisk trading were sought after by mid and small-cap investors, which lead to hype and speculation."
The number of mid- and small-cap individual investors has increased. From 2010 to 2012, the volume of new accounts in the Shenzhen market increased from 76.2 million to 84.2 million, while the number of active accounts went up from 19.4 million to 24.5 million.
From 2007 to 2012, the percentage of free-float market capitalization held by individual investors decreased from 60.4% to 42.8%, but the percentage of their trading value fell at a slower pace from 87.4% down to 85.6%. The exchange deduces that the proportion of individual investors will remain high in China's stock markets, and that will require an improvement in the trading structure.
The SSE says that individual investors in the ChiNext market tend to have even higher risk tolerance. ChiNext was started in 2009. It is a NASDAQ-style market for high growth and tech start-ups. From Q1 to Q4 in 2012, the percentage of free-float market capitalization holding by individual investors in the ChiNext market reduced from 71.3% to 63.4%, as the percentage of free-float market capitalization holding by institutional investors increased.
The Shenzhen Stock Exchange (SSE) published a study on 15 May 2013 that analyses the behavioural change of investors in the Shenzhen market. It shows the continued heavy participation by retail investors, even as institutional investment accumulates more of the free-float.
t concludes that mid- and small-cap investors are still vulnerable, in what the exchange describes as the "eco-system of the stock market".
The SSE says that individual investors with capital less than CNY100, 000 showed the lowest return on investment among all investor classes, although it does not specify the exact returns by segment.
Its found that mid and small-cap investors prefer holding and trading highly speculative stocks. The average shareholding period for individual investors was only 39 days, which is much shorter than the 190 days for institutional investors (albeit higher than their 31-day average recorded three years ago). According to the report, "stocks with strong volatility and brisk trading were sought after by mid and small-cap investors, which lead to hype and speculation."
The number of mid- and small-cap individual investors has increased. From 2010 to 2012, the volume of new accounts in the Shenzhen market increased from 76.2 million to 84.2 million, while the number of active accounts went up from 19.4 million to 24.5 million.
From 2007 to 2012, the percentage of free-float market capitalization held by individual investors decreased from 60.4% to 42.8%, but the percentage of their trading value fell at a slower pace from 87.4% down to 85.6%. The exchange deduces that the proportion of individual investors will remain high in China's stock markets, and that will require an improvement in the trading structure.
The SSE says that individual investors in the ChiNext market tend to have even higher risk tolerance.
ChiNext was started in 2009. It is a NASDAQ-style market for high growth and tech start-ups. From Q1 to Q4 in 2012, the percentage of free-float market capitalization holding by individual investors in the ChiNext market reduced from 71.3% to 63.4%, as the percentage of free-float market capitalization holding by institutional investors increased.