Chinese stock investor Hou Yujie rents traditional Chinese clothes near the forbidden city of Beijing in her shop. September 18, 2025.
CNBC
When Hou Yujie isn’t convincing her clients to borrow traditional Chinese clothes for photos in the country’s famous forbidden city, she and her friends are checking out the stocks.
Hou recently put 10% of her money in the market. In just a few days, she earned a month’s salary. And she’s excited.
“The interest rates on bank deposits are so low that I don’t even want to worry about them,” Hu said at her shop outside of a tourist spot in Beijing. “Stocks are a hot topic right now.”
Chinese stocks, once considered by many to fail to match, are seducing both local and foreign investors who have been impressed by recent returns. Shanghai’s composites reached a 10-year height earlier this month. Hong Kong’s Hang Sen Index also rose 30% in 2025, surged nearly 36%, at its largest annual progression pace since 2017.
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Shanghai Composite since 2015
Government signals encourage investors to jump in.
“There is a change in policy intentions as deflationary pressures become increasingly pronounced,” said Hao Hong, CIO at Lotus Asset Management. “The policymakers felt they needed to do something to focus on the government’s work on economic growth rather than minimizing risk.”
Chinese investors have announced measures to support the economy and stock markets until the start of a rally called “9/24 Performance” and September 24, 2024, when the central bank governor and other top financial chiefs held rare coordinated news outlet briefings.
Authorities held a similar media briefing on Monday, declaring that China’s capital markets are expanding their “circle of friends” thanks to new interest from foreign investors.
According to the Daily Trading Report, for the first time in four years, Cathie Wood’s Ark Investment Management Funds Fund has resumed its position on Alibaba.
The government is also trying to push in more institutional funds to make the Chinese market a storage for wealth like US stocks. Regulators require insurance companies and state mutual funds (traditionally bystanders) to increase their shareholdings.
It’s not just that Chinese retail investors are getting clues from the government. There are also very few other investment options.
Retail Investor Push
After a massive stock conflict a decade ago, ordinary Chinese citizens have generally been wary of putting money into the stock market because they were burned. But we are looking at the stock market again as the real estate sector continues to have a long recession and restrictions on investment abroad are still tightening. Relieving tensions in the US-China trade war and the advancement of AI and chips in China has also heightened emotions.
“AI and drones are developing rapidly in China, and I think there is a great potential for these stocks,” Hou said.
However, changing the way you think about Chinese on a daily basis may take some time.
“A lot of retail investors still believe it’s gambling. It’s a casino. No one believes it’s a long-term investment. It’s very different from the US,” Hong said.
Unlike the United States, where retail investors make up about 20% of trade, China’s average investors drive 90% of daily trading, according to data from HSBC.
This means that the Chinese stock boom could soon turn into a bust.
“As soon as I hear or feel the market is falling I grab some money and run for my life,” Hu laughed.
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