24 million small investors fled China stock market after crash
7 Aug 2015 6:06 AM IST
The number of small investors holding stocks in their accounts slid to 51 million at the end of July from 75 million in June, China Securities Depository & Clearing Corp, the agency that tracks accounts said.
Shanghai Composite Index plunged 14 <g data-gr-id="43">per cent</g>, a record <g data-gr-id="42">single month</g> drop in six years.
Unlike institutional investors dominated US stock market, small and individual investors are major players in Chinese stock market, state-run China Daily reported.
According to data from China International Capital Corp, small investors hold about 80 <g data-gr-id="41">per cent</g> of outstanding shares of public companies.
China has pressed in police to investigate massive stock market crash wiping about $3.2 trillion of capital. Official media put the losses around $1.1 trillion.
Since the start of market plunge after it hit <g data-gr-id="53">peak</g> in <g data-gr-id="55">mid June</g>, <g data-gr-id="54">government</g> rolled out series of easing policies and measurement, but the results have had limited impact.
Despite stocks becoming cheaper due to market plunge, fewer people are entering the market.
Compared to June, 20 per cent fewer new accounts were created in July, the report said.
Bank deposit is still the favourite investment tool for Chinese families. Up to 50 <g data-gr-id="46">per cent</g> of disposable income will end up in families’ saving account, according to data from World Bank.
Due to recent volatility, it is unlikely that many families will move their money from saving account to <g data-gr-id="81">stock</g> market. China’s recent stock market <g data-gr-id="49">crash in</g> June <g data-gr-id="50">12,</g> wiped out about three trillion dollars of capital. The fall sent a warning to China’s economy that has already faced downward pressure such as sluggish external demand and weak investments.
The stock market had lost around 29 <g data-gr-id="39">per cent</g> of its value since its peak of 5,178.19 points.
China Govt spent $147 bn to pep stocks
US investment bank Goldman Sachs has estimated the Chinese government has spent up to 900 billion yuan ($147 billion) in the last two months to try to prop up stock prices and halt a market rout.
After the Shanghai market peaked in mid-June and then fell 30 <g data-gr-id="88">per cent</g> in three weeks, the government intervened with a rescue package that included funding the state-backed China Securities Finance Corp. (CSF) to buy <g data-gr-id="90">stock</g>.
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