“Close securities account” as a phrase cropped up 56 million times on social media platform WeChat on Oct 9, as the benchmark index posted its worst performance since 2020. Money soon shifted back into savings from stock trading accounts, according to a bank index. Retail investors took to social media to lament their losses, with one user on Xiaohongshu saying “the stock market is really not suitable for a novice like me.”
China’s 200 million-strong army of retail investors was supposed to help the market turn a corner. Instead, it has become a source of weakness.
The country’s US$9.7 trillion ($12.73 trillion) stock market experienced a rapid boom and bust starting late September, when central bank stimulus pushed the benchmark CSI 300 Index 25% higher in five days of trading. Many small investors who came late to the party were caught out when equities then slumped, and were forced to beat a hasty retreat.
