SZSE has recently completed the 2020 survey of individual investors. The survey aims to track and understand individual investors and further improve the pertinence and effectiveness of investor education and protection. SZSE has conducted the survey for 12 years straight since 2010. In this survey, samples are taken from securities accounts distributed in 342 small, medium and large cities of 31 provincial administrative regions (excluding Hong Kong, Macao and Taiwan) across China, and respondents are investors between the ages of 18 and 60 who traded stocks on Shenzhen and Shanghai stock exchanges over the past twelve months. A total of 27,667 effective questionnaires are received. The survey results show:
New entrants are becoming younger, and the investment and wealth management demand is strong. The average age of new entrants is 30.4, age 0.5 younger from 2019. Investors’ wealth management demand through stocks and mutual funds has increased substantially. The average assets in investors’ securities accounts are CNY 597,000, up CNY 50,000 from 2019, the highest level over the years of survey. Investors of mutual funds account for 67.1%, a sharp increase of 21.3% from 2019.
The long-term value investment philosophy has been enhanced, and investors with more assets in their securities accounts show higher acceptance of the long-term value investment philosophy. The proportion of investors who apply the long-term value investment philosophy has increased year by year, from 20.4% in 2015 to 31.1% in 2020. The proportion of investors with irrational investment behaviors such as excessive fear (17.5%) and overconfidence (25.6%) have decreased by 11.2 percentage points and 7.6 percentage points respectively from 2019. Among the investors with assets of over CNY 500,000 in their securities accounts, 32.8% accept the long-term value investment philosophy, 2.4 percentage points higher than the proportion of small and medium investors with assets of less than CNY 500,000 who accept such philosophy.
Profit-making investors have a more mature investment philosophy, their investment behaviors are more rational, and they attach more importance to study. Profit-making investors approve the long-term value investment philosophy more. 35.7% of profit-making investors think that they invest with a long-term value investment style, 7.5 percentage points higher than money-losing investors who think so. The proportions of profit-making investors with such irrational investment behaviors as short-swing trading, disposition effect, believing rumors easily and not using stop-loss strategy are 12.4 percentage points, 6.9 percentage points, 6.8 percentage points and 6.0 percentage points lower than those of money-losing investors with such behaviors. Profit-making investors attach more importance to “reading research reports released by financial institutions” “reading information disclosed by listed companies such as prospectuses, periodical reports and interim announcements”. The proportions of such profit-making investors are 11.3 percentage points and 7.4 percentage points higher than money-losing investors, respectively.
The knowledge level of investors varies, making it necessary to improve the pertinence of investor education. In terms of the content of investor education, the most popular are disclosure of investment risks (66.1%), popularization of basic knowledge about securities (64.2%), interpretation of trading rules and financial laws and regulations (59.9%) and introduction to investment products and investment strategies (58.1%). In terms of investment knowledge, in the 100-score test, investors’ average score is 71.8. The knowledge level of investors varies by sector, region and number of years in the market. The average score of investors in the ChiNext Board is 73.1 points, 3.8 points higher than that of other investors; the average scores of investors from South China and East China are 72.8 points and 72.6 points respectively, 5.1 points and 4.9 points higher than that in Northwest China respectively; the average score of investors who have been in the market for 5 to 10 years is 73.9 points, 4.7 points higher than that of new entrants; and the average score of profit-making investors is 75.7 points, 6.4 points higher than that of money-losing investors. In terms of test content, investors with a lower score relatively lack knowledge about shareholders’ rights, trading rules and financial terminology. Therefore, it is necessary to guide some investors to strengthen learning in a targeted manner.
Investors support the ChiNext Board reform and the pilot project of the registration-based IPO system and expects the registration-based IPO system to run steadily. 66.9% of investors think that “the ChiNext Board will embrace more companies with new technologies, new industries, new business forms and new models”. Investors believe that the registration-based IPO system reform will “help enhance the functions of the capital market and improve direct financing channels” (57.4%), “help bring back pricing to the normal track and achieve virtuous market circulation” (53.2%), and “help hard technology companies, innovative enterprises and startups get listed on the A-share market” (49.9%). Meanwhile, they advise that the stock exchange should “improve the continuous regulation capability of listed companies and strengthen the whole-process regulation of intermediaries” (42.6%).
Investors support the reform of the delisting system, and nearly 40% of investors have no intention to participate in the trading of stocks with a risk warning. In general, investors believe that the revision to delisting regulations can help improve the quality of listed companies (66.6%), and guide listed companies to focus on main business and standardize operation (61.9%). In terms of the revision content of delisting regulations, investors pay more attention to delisting indicators, which are, by order of attention, trading indicators (58.1%), financial indicators (54.9%), standard operation indicators (52.5%) and major violation indicators (45.9%). 39.0% of investors make it clear that they are unwilling to trade stocks with a risk warning (ST and *ST stocks) and think they are beyond their risk capacity.
Investors expect the capital market to deepen reform in all respects and hope the investor protection system can play a better role. In 2021, the capital market has been steadily deepening reform on all sides. The survey finds that the reform measures that investors expect the most are refining the regular delisting mechanism (58.8%), implementing the registration-based stock issuance system across the board (57.8%), and taking a firm hand against securities and futures crimes (57.3%). The investor protection systems that investors care the most are special representative litigation for securities disputes (56.0%), securities backed litigation of China Securities Investor Services Center (49.7%), and shareholding and rights exercise by China Securities Investor Services Center (42.3%).
