TLDR:
- Young investors in their 20s and 30s are rushing to open stock trading accounts in Hong Kong and mainland China
- Online trading platforms are overwhelmed, leading some to visit physical brokerage branches
- The Hang Seng Index rose 18% in September, fueled by US rate cuts and Chinese stimulus measures
- Account openings at some online brokers increased 40-73% week-over-week
- Trading volume and turnover hit 2-year highs, with tech giants seeing major investor interest
The stock markets in Hong Kong and mainland China are experiencing a surge of activity as young investors rush to open trading accounts and capitalize on the recent $1.8 trillion rally.
This influx of new market participants, primarily millennials in their late 20s and early 30s, has overwhelmed online trading platforms and driven many to seek alternative methods of entering the market.
The Hang Seng Index, Hong Kong’s benchmark, rose an impressive 18% in September, marking its best month since November 2022.
This rally was triggered by the US Federal Reserve’s decision to cut its key rate on September 18, signaling the beginning of a rate cut cycle.
The momentum was further amplified by Beijing’s announcement of a stimulus package on September 24, aimed at supporting the Chinese economy.
As a result of this market enthusiasm, online brokers have reported significant increases in account openings. Tiger Brokers (HK) saw a 73.4% week-over-week rise in new accounts, with 80% of these opened by individuals under 30 years old. Similarly, Futu, a major online broker in Hong Kong, experienced a 40% increase in account opening inquiries compared to normal levels.
The surge in new investors has not been without its challenges. Many aspiring traders have encountered difficulties opening accounts on the online platforms of banks and brokers due to system overload.
This has led to a surprising trend: young investors visiting physical branches of traditional brokerage firms to open accounts, a method typically favored by older generations.
Tom Chan Pak-lam, permanent honorary president of the Institute of Securities Dealers, noted this unusual phenomenon:
“It is interesting to see many young investors, in their 20s and 30s, visiting branches of some of the oldest brokers in Hong Kong in recent days to open new stock trading accounts.”
The market rally has not only attracted new investors but also reactivated dormant ones. Trading volumes have surged, with Futu reporting a 95% week-over-week increase in stock trading volume via its online platform. The number of active investors on their platform also rose by 60%.
Investor interest has been particularly strong in mainland tech giants such as Tencent Holdings, Meituan, Xiaomi, and Alibaba Group Holding. Many investors are taking advantage of the market upswing to sell stocks they purchased at higher prices in previous years.
The enthusiasm extends beyond Hong Kong to mainland China’s markets. The CSI 300 Index, a key benchmark for Chinese stocks, jumped as much as 9.1% on a single day, its largest gain since 2008. This surge has put the index on track for a technical bull market after losing 45% of its value since 2021.
Government stimulus measures have played a crucial role in fueling this rally. Three of China’s largest cities have relaxed rules for homebuyers, while the central bank has moved to lower mortgage rates. These initiatives are part of a broader stimulus package that includes interest rate cuts, increased liquidity for banks, and direct support for the stock market.
The impact of these measures has been significant, with trading volume on the Shanghai and Shenzhen bourses exceeding 2.4 trillion yuan ($340 billion) in a single day. This frenzy of activity has led to technical challenges, with several local brokerages experiencing delays in processing orders on their trading applications.
