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SHANGHAI: Chinese mom-and-pop investors are stampeding into the stock market for fear of missing out on the bull run, with more than 1.6 million share trading accounts newly opened in December, doubling from a year earlier, latest data shows.

Mainland euphoria is also spilling across the border, with a record amount of Chinese money gushing into Hong Kong-listed stocks such as Tencent Holdings and Xiaomi Corp via the Stock Connect trading scheme.

The number of Chinese individual stock investors rose 11% on year to 177.4 million at the end of 2020. During each of the past 10 months, more than a million people opened trading accounts, data from China’s securities clearing house showed.

China’s benchmark CSI300 Index is flirting with record highs as the government seeks to channel household money into stocks to fund innovation, while curbing investment in real estate.

Investor optimism was also fueled by Beijing’s bold capital market reforms and China’s quick recovery from the coronavirus-triggered slump in early 2019.

Highlighting the retail fever, a Chinese mutual fund on Monday attracted a record $37 billion worth of investor subscriptions on the first day of sales.

Meanwhile, Chinese exuberance is overflowing into Hong Kong, as mainland inflows into the city’s stocks under the Connect scheme hit a record HK$26.6 billion ($3.43 billion) on Tuesday.

Since the start of the year, Chinese investors have been hunting for bargains among companies blacklisted by the U.S. government for alleged military ties such as SMIC and CNOOC Ltd, as well as Internet giants Tencent and Xiaomi which are not available onshore.

“You fish where there are big fish. And you invest where there are great companies,” Richard Pan, portfolio manager of China Asset Management Co (ChinaAMC), told a roadshow late on Tuesday to promote investment in Hong Kong stocks.

Edmond Huang, head of Hong Kong and China research at Credit Suisse, said mainland investors were being lured into the Hong Kong market by relatively low valuations as well as opportunities created by U.S. investment bans.

Even after recent strength in the Hang Seng Index, Chinese onshore A-shares still trade at a more than 30% premium over Hong Kong-listed H-shares. – Reuters


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