Investor confidence up in Q3

Investor confidence in China strengthened in the third quarter, driven by a rebound in A shares and steady growth of Chinese technology firms, a survey by Cheung Kong Graduate School of Business showed.

The poll launched in July, which surveyed around 1,300 investors and 800 financial professionals, found investor sentiment had improved, with 63.1 percent of respondents expecting A-share gains. This proportion is 1.6 percentage points higher than the investor sentiment survey in April and 15.6 percentage points higher than the one in July 2024.

Over a one-year period until August, the benchmark Shanghai Composite Index had climbed 35.7 percent, and the Shenzhen Composite Index surged 58.2 percent.

The survey, led by Liu Jing, professor of accounting and finance at CKGSB, found that the current rally in A shares has been driven primarily by valuation expansion rather than improved fundamentals of listed companies.

"The year-long A-share rally shows at least partial recovery of investor confidence. The survey reflects both optimism and caution; while investor confidence is rebounding, sustainable growth will require deeper structural reforms," Liu said.

Valuation recovery has been mainly driven by three factors, including policy support rolled out since late last year and technological breakthroughs achieved by several Chinese technology companies. The breakthroughs have spurred gains in A-share sectors such as semiconductors, automation and industrial metals.

Besides, China's forward-looking, systematic and targeted response strategies adopted amid this round of Sino-US trade frictions have significantly boosted market confidence in the nation's economic resilience and independent technological development capabilities.

"A sustained bull market hinges on robust fundamentals. Critical to shoring up these fundamentals are structural re-balancing from investment to consumption, technological innovation, industrial upgrading, and dynamic private-sector activity," Liu said.

He added that the proportion of service consumption in China is poised to keep expanding, and this segment calls for further stimulation, given its substantial growth potential.

China unveiled a new policy package recently to further boost the growth of service consumption. The guideline, jointly issued by the Ministry of Commerce and eight other entities earlier this month, listed 19 measures to propel the expansion of service consumption.

zhuwenqian@chinadaily.com.cn