A-share trading stays active despite recent market volatility
China's stock market ended mixed on Wednesday, with the benchmark Shanghai Composite Index down 1.16 percent to 3,813.56 points and the Shenzhen Component Index slipping 0.65 percent to 12,472.
On the other hand, the ChiNext Index, which tracks growth-oriented companies on China's Nasdaq-style board, advanced 0.95 percent to 2,899.37.
The biggest gainers in the A-share market on Wednesday included precious metals, photovoltaic equipment, and gaming. Despite recent volatility, trading activity in A-shares has remained robust, signaling continued investor participation.
As of Monday, margin financing and securities lending balances on the Shanghai, Shenzhen, and Beijing exchanges climbed to 2.3 trillion yuan ($322 billion), up 35.64 billion yuan from the previous trading day and topping the prior record of 2.27 trillion yuan set on June 18, 2015. Margin financing accounted for 2.28 trillion yuan of the total, also surpassing its historic high from the same date.
According to data released by the Shanghai Stock Exchange on Tuesday, 2.65 million new A-share accounts were opened in August, up nearly 690,000 from July, representing a month-on-month rise of more than 30 percent and a year-on-year surge of about 165 percent.
In the first eight months of this year, 17.21 million new A-share accounts were opened on the Shanghai Stock Exchange, up about 48 percent from the same period last year.
At its morning meeting on Wednesday, CSC Financial said A-shares have entered a moderate recovery cycle with earnings confirming an inflection point. Structural divergence matters far more than aggregate trends, highlighting the accelerated shift between old and new growth drivers.
Technology manufacturing, driven by the AI cycle and domestic substitution, is delivering rapid earnings growth and has become the core engine. Midstream manufacturing has benefited from falling costs, showing resilient profitability. In this recovery phase, price improvements are outpacing volume expansion. Within new sectors, the AI industry chain is already generating strong results, while robotics and innovative drugs face opportunities from mass production and a turnaround in challenges. New consumption requires closer attention to the transmission from revenue to profit, said CSC Financial.
Overall, economic recovery still needs policy support, and the market is expected to remain structurally driven, requiring selective focus on high-prosperity sectors, said the Beijing-based Chinese investment bank and brokerage firm.
Retail participation typically rises when the A-share market strengthens. With bank deposits continuing to grow strongly, a stronger stock market could attract more deposits into equities. Moreover, A-share performance is closely linked to trading volume, and valuations remain attractive compared with other markets, suggesting significant upside potential, analysts said.
Goldman Sachs said in a recent report that only 22 percent of Chinese household financial assets are currently allocated to funds and equities. Over 10 trillion yuan is estimated to flow into the stock market. This suggests considerable upside in the Chinese equity market, particularly in small- and mid-cap stocks.
Analysts at Goldman Sachs noted that indexes such as the CSI 1000 and CSI 500 warrant close attention, benefiting from higher retail ownership, more balanced sector allocation, and greater exposure to high-tech manufacturing.
According to estimates by China International Capital Corp, potential inflows of household deposits into equities could reach 5 trillion to 7 trillion yuan, possibly exceeding the scale seen during the 2016-17 and 2020-21 market rallies. However, the actual amount entering the market will depend on multiple factors, including macroeconomic conditions, policy expectations, and external developments.
Some brokerages noted that overall A-share valuations remain within a reasonable range, but cautioned that the recent sharp rise in turnover could lead to greater short-term volatility.
