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China's 'silver-haired' investors exit the game with no one waiting in the wings

Li Jixin remembers his first years on China’s trading floor like they happened yesterday.

The former office worker, now 73, can practically hear the shouts and feel the heat from those heady times in the early 1990s, when sweat-drenched crowds packed into securities firms like sardines to yell their picks at weary traders.

Three decades later, Li’s passion has faded. Though he is still holding onto around 80,000 yuan (US$10,932) in shares, the native of East China’s Zhejiang province has been waiting for a chance to completely pull out from what he considers gambling by another name.

“Safeguarding what I have seems to be more important than making new money as I get older and the economy slows down,” he said. “I want to spend my remaining years at ease.”

Li was part of China’s first generation of retail investors who are now staying away from the market – which fell to its lowest level since 2019 in late October – as they give up on building more wealth in their old age.

Those in younger generations, meanwhile, appear to have far less interest in investing than their elders as stability is increasingly cherished and confidence in China’s future growth has slackened.

The benchmark CSI300 index of the top 300 Shanghai- and Shenzhen-listed stocks has lost more than 6 per cent of its value so far this year, and was at around 3,620 at close on Tuesday (Nov 7). In October, the index fell to its lowest level since 2019.

A decreased appetite for risk among both the old and young is leading to a diminished cohort of small investors and a bigger role for professional entities, analysts said.

There were over 220 million individual investors at the end of August, accounting for more than 99 per cent of all investors according to data from the China Securities Depository and Clearing Corporation.

Though the share values they hold are relatively low – per the most recent statistics released by the Shanghai Stock Exchange, about a quarter of total value as of the end of 2021 – they still have a great impact on the market.

“Many of my friends and former colleagues have left after enduring a big loss, and some are just like me, waiting for a good point to withdraw,” Li said.

That point, Li seems to think, is not imminent.

“When I bought PetroChina shares, they were priced at over 40 yuan, and now they’re only 5 or 6 (now 7.16),” he said. “How likely is a reversal?”

Investor confidence is still anaemic, despite new-found momentum in China’s economy. The country’s third quarter gross domestic product expanded by 1.3 per cent from the previous quarter, according to official data, but challenges persist as the real estate market shows little signs of recovery and local government debts mount.


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“Silver-haired” investors – those who are 60 or older – accounted for 4.73 per cent of all individual investors in China’s stock market in 2018, according to a survey led by internet giant Tencent. By late last year, the same survey showed this ratio had dropped to 2.65 per cent.

The younger generation is also turning away from the stock market as they become more conservative and less tolerant of loss, according to studies by Shanghai Jiao Tong University’s Shanghai Advanced Institute of Finance (SAIF) and financial services provider Charles Schwab.

In their annual poll of people with yearly incomes between 125,000 and 1 million yuan, only 17.3 per cent of the 18 to 24 age group stated they own stocks this year, compared to 26.6 per cent in 2021.

This proportion also declined for the 25 to 34 age group, from 32.8 per cent in 2021 to 17.9 per cent this year.

Bucking this trend is Hu Xijin, an online influencer and former chief editor of the nationalistic tabloid Global Times, who in June opened an account to trade on the A-share market – exchanges where shares are denominated in the renminbi, the national currency.

But the market has disappointed so far. In public posts he claimed to have put nearly 500,000 yuan in his account under the belief the market has bottomed out, but has suffered a loss of thousands of yuan instead.

“Someone warned me online that picking up plastic bottles is more profitable than buying stocks,” Hu wrote in a recent Weibo post. Despite his losses, he is still providing updates on his experience, which he said will let him “feel the Chinese economy better”.

While the stock market was a rare chance to reap without sowing for early participants, the best time has passed for China’s Generation Z, Li said.

The Chinese stock market was established in 1990 with the founding of two domestic exchanges in Shenzhen and Shanghai.

Li, who earned a monthly salary of less than 300 yuan (US$41) back then, initially invested 10,000 yuan. That money soon grew multiple times over, as limiting mechanisms were not yet in place.

“It’s the dividend of time,” he said, “as the Chinse economy rose with reform and opening-up. But it’s certainly not the case now.”


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However, others said, young people today have more options for investment as well as leisure, which may serve as a partial explanation for their disinterest in stocks.

Recalling his decision to enter the stock market in the 2000s, He Zhi, a retired civil servant from Guangdong province, said: “I was not busy at work, and I had plenty of time after work. There were not as many pastimes as we have now, so I opened a stock account after it became a hot topic among my friends and relatives.”

Danny Liu, a 28-year-old software engineer in Shanghai, has made sure to stay away from the stock market as “even professionals can’t make money out of it”. He has instead embraced professionally managed funds, as have many others his age.

“Their returns have dropped as well, but at least I won’t lose my initial investment, so I sleep soundly at night,” he said. “If I have spare time, I’d rather spend it playing online games.”

Qian Qimin, chief analyst at the research arm of Shenwan Hongyuan Securities, said fewer individual investors could be a good thing for the market.

“In fact, young people are indirectly involved in the stock market as they invest in funds,” Qian said. “Let professionals do what they specialise in – it’s a process of de-individualisation of investing, which is a trend in line with Hong Kong as well as the United States.

“The young people I know, at least, rarely pick stocks themselves,” he said. “The more small investors a market has, the less efficient it is.”

He also discouraged elderly people from trading stocks, as many tend to be unfamiliar with emerging industries like technology.

Older Chinese investors have shown relatively low financial literacy compared with young adults, according to another report on financial literacy published by the SAIF and Charles Schwab last year. Those older than 65 scored 53.7 on a 100-point test, compared with an average score of 64.4 among all age groups.

Zhao Xijun, a finance professor with Renmin University, said while the number of individual investor accounts may not nosedive immediately, their proportional share value is falling. Greater domination from institutional investors “will have great implications”, he noted, “as they are playing a bigger role in maintaining market stability.

“It also means that if we want better performance from the market, it’s not just about better competitiveness from listed companies, but also (management and supervision of) institutional investors.”

Li, the Zhejiang retiree, said his decades of dedication to the stock market never fulfilled his dreams of fortune, despite an abiding nostalgia.

“After I gained a sum, I always gave it back,” he said.

“It’s really just a game.”

This article was first published on SCMP.

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