Chinese Investors Turn Wary Despite Corporate Profit Recovery

Respondents have lowered their return expectations to negative 0.7%, reflecting a sharp pullback in direct stock investment. The proportion of investors planning to increase their holdings fell to 10.7%, a 7.3 percentage point decline since April. This hesitation persists even as market turnover ratios climbed significantly, reaching 4.2 for the Shanghai Composite Index and 8.5 for the Shenzhen Composite Index by August.

Liu Jing, a professor at the Cheung Kong Graduate School of Business, identifies this trend as a fundamental divergence in investor strategy. While private enterprises recorded a 36.7% surge in net profit during the second quarter, capital remains trapped in a structural imbalance. Financial resources continue to favor the public sector and state-owned enterprises, failing to stimulate the household consumption necessary to sustain long-term growth. As property adjustments drag on, the survey underscores that rising corporate profits alone are currently insufficient to restore broad market confidence.