Small investors banking on new range of options

A bank clerk at a Bank of China branch in Nanchong, Sichuan province. Many small Chinese investors are turning their backs on low interest savings accounts and moving their money into online funds. [Photo/CFP]

Online wealth funds and stocks prove popular despite the turbulence buffeting major markets

Small investors have poured into China's stock markets and moved away from low interest savings accounts at traditional banks.

Their cash has mingled with the millions of dollars pumped in by major domestic players and foreign private equity companies. The result has been staggering.

Earlier this month, shares on the Shanghai Stock Exchange Composite Index closed at a seven-year high, breaking through the 5,000 level for the first time since 2008. By the end of trading, the benchmark index had ended up 1.5 percent to 5,023.10.

The bull run was turning into a rampage as ordinary investors piled into stocks, looking for double digit profit.

"We predicted that domestic stock markets would enjoy significant policy support in the coming years, because of their central role in attracting overseas liquidity back to the Chinese mainland," Matthew Plowright, principal of China Confidential, a research arm of the Financial Times newspaper, said.

"This is acting as a new driver of money supply and (helping) to accelerate the pace of State-owned enterprise reform. These policy supports are long-term and broad-based."

For small investors, the market is seen as the ideal place to grow their financial nest eggs.

According to monthly survey of retail investors by China Confidential, almost half of the 1,000 polled believed it was a "good time" to invest in yuan-denominated A shares. Only 18.5 percent of those who took part in the survey last month in more than 300 Chinese cities felt it was a "bad time" to invest in stocks.

Ma Jing, an information system technician at a news service provider in Shanghai, falls into the upbeat category. Back in August, 2014, she significantly increased her stock portfolio, which now accounts for 80 percent of her investments.

During her spare time, Ma consumes market information. At 6 pm every day, she turns on the television to watch financial news programs for three hours. So far, she has seen the value of her stocks soar by between 50 to 60 percent without revealing further financial information.

Her favorite long-term sectors are emerging industries that combine Internet technologies with traditional businesses, including online education and Internet-based medical services.