Share trading volumes in China have plummeted to their lowest levels in over four years, reflecting growing investor pessimism amid a faltering economy and a surging bond market. On Monday, turnover on the Shanghai and Shenzhen exchanges fell to just 496 billion yuan ($69.1 billion), marking the smallest trading volume since May 2020 and the lowest in relation to China’s total market capitalization since late 2019.
The drop in trading activity comes as China’s stock market is poised to experience its fourth consecutive year of losses. A severe housing crisis and economic slowdown have driven investors toward government bonds, creating a significant shift in investment patterns and raising concerns among regulators. This shift has contributed to heightened volatility and uncertainty in the stock market.
Despite the sharp decline in trading volume, some investors, like Shao Qifeng, Chief Investment Officer at Ying An Asset Management Co., believe that current market conditions might present buying opportunities. “The turnover shows that the market is rife with pessimism,” Shao said. “But I think things aren’t as bad as currently priced, and adding positions if possible at this point is a no-brainer.”
China’s benchmark CSI 300 Index has fallen more than 3% this year, underperforming compared to other major global equity indices. As of Tuesday’s midday, the index was down 0.2%, approaching a 10% decline from its peak in May. The contraction in trading volume is also evident in Hong Kong, where trading activity dropped to HK$70.3 billion ($9 billion) on Monday, the lowest since February, although Hong Kong stocks have generally performed better than their mainland counterparts.
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