Stock Trading In China Spikes As Government Clampdown Intensifies

Chinese investors are turning to the stock market as other investment vehicles such as real estate and cryptocurrencies come under tighter government control.

Since July, daily trading volume in mainland Chinese A shares have held above 1 trillion yuan ($154.56 billion U.S.) and climbed to a high for the year on Wednesday (September 1). Trading volume in China is now about twice the daily average of the last two years.

On Wednesday of this week (September 1), trading volume in the Shanghai composite index was 842.2 billion yuan, the highest since July 2015, the summer China’s stock market crashed amid rampant speculation.

This summer been one of intense Chinese government regulation hitting the technology and education sectors. An underlying political call for "common prosperity" and moderate wealth for all, rather than just a few has emerged as Beijing’s impetus for the new policies.

Surging house prices over the last few decades have attracted significant speculation and created financial burdens for families trying to buy a home. Chinese authorities have emphasized in the last few years that "houses are for living in, not speculation" and restricted the ability of property developers to build up new houses with high levels of debt.

Mainland China’s stock market, the second largest in the world, has grown significantly since the 2015 crash and has drawn a greater share of institutional investors. But speculation-prone retail investor behavior remains in a stock market many have compared to a casino.

The heightened investor interest has affected Chinese stock indexes differently. This week, the Shanghai composite index is on track for gains of more than 2%, while the Shenzhen composite is little changed, and the Star 50 is down more than 5%.