To have a systematic understanding of the individual investor group, track changes in the investor structure and behavioral characteristics and improve investor education services and investor protection in a more pertinent and effective way, SZSE recently conducted a survey on individual investors in 2019. The framework of the survey is similar to previous ones, mainly involving investor structure, knowledge level, investment concepts, transaction behavior and investor education demand. The survey also touches upon investors’ opinions on the hot issues in capital market.

The geographical distribution of securities accounts is taken into consideration, and stratified sampling is adopted. A total of 24,896 investors (hereinafter referred to as “respondents”) from 342 cities of different sizes nationwide have answered the questionnaires. The results of the survey are as follows:

I. The average account assets of the respondents increased, the proportion of small and medium investors decreased, and the proportion of stock asset allocation rose slightly.

In 2019, the average account assets of the respondents reached CNY547,000, an increase of CNY102,000 over the previous year. Among the respondents, small and medium investors with securities account assets below CNY500,000 accounted for 75.1%, down 4.9 percentage points from the previous year. Respondents invested 27.3% of household current assets in stocks, 1.7 percentage points above the previous year; the proportion of stocks in the asset allocation by respondents over 40 years old was 29.3%, 5 percentage points higher than that by respondents under 30 years old.

II. Respondents are more willing to participate in mutual funds, and investing in a share stock-market indirectly gradually became a trend.

It became a new market trend that investors indirectly invest in a share stock-market through mutual funds. Last year, respondents who once participated in mutual fund transactions rose significantly by 17.2 percentage points from the previous year and accounted for 45.8%, the highest level in the past four years. Among them, respondents under 30 years old accounted for 49.4%, 7.5 percentage points higher than respondents over age 40.

III. Respondents’ investment knowledge continued to enrich on the whole, and the investors on ChiNext Board scored higher in the knowledge test.

In recent years, with constantly enhanced investor education, respondents’ investment knowledge improved continuously. Overall, compared to 2014, the investment knowledge of respondents in 2019 improved significantly, and their average score in the investment knowledge test rose from 57.6 to 73.8.

In terms of investor structure, the average score of the ChiNext Board investors in the knowledge test was 75.5, higher than the overall average score. New investors (average score 70.8) and investors in the northwest region (average score 70.1) scored lower than the overall average score. There was little difference among investors at different age groups. In terms of accuracy, investors had relatively inadequate knowledge about financial products, investors’ right and interest, and trading rules.

IV. Respondents are more rational than before, short-swing trading reduced, and profit-making investors demonstrated higher rationality.

Among the respondents in 2019, 15.5% of investors engaged in short-swing trading , a decrease of 4.5 percentage points over the previous year, while the proportions of value investment and trend trading were basically the same as that in the previous year. The short-swing trading the respondents clearly reduced. Investors trading several times within one week account for 35.0%, down 11.4 percentage points from the previous year. In addition, common irrational mental biases such as excessive panic (28.7%, down 14.7 percentage points from the previous year), speculation (32.4%, down 14.4 percentage points) and disposition effect (27.2%, down 11.8 percentage points) decreased markedly.

By comparing profit-making investors and money-losing investors among the respondents, it’s found that profit-making investors were much more rational in investment than money-losing ones. Among profit-making investors, the incidences of irrational mental biases such as disposal effect (selling profit-making stocks too early and holding money-losing stocks in the long term), credulity with rumors, and present-biased preference (rather buying stocks that may rose 10% in price tomorrow than buying those that may double in price in a year) were 14.8 percentage points, 8.1 percentage points and 7.6 percentage points lower than those of money-losing investors.

V. Investor education demands such as basic securities knowledge and investment risk disclosure were strong, while the long-term investment awareness still needs to be further guided and cultivated among small and medium investors.

Targeted investor education can help improve investors’ financial literacy. Respondents thought that the most needed investor education contents were, popularization of basic securities knowledge (65.6%), investment risk disclosure (63.2%), introduction to investment products and strategy (59.7%), and interpretation of rules (58.2%), respectively. In terms of investment concept, among small and medium investors keeping less than CNY500,000, 27.4% upheld a long-term value investment concept, a relatively lower proportion than that of other investors, making it necessary to conduct targeted education among small and medium investors to guide and cultivate a long-term investment concept.

VI. Respondents expected reform of the ChiNext Board, and paid close attention to the strengthening of the inclusiveness of the ChiNext Board, the improvement of the delisting system, the enhancing of issuers’ and intermediaries’ responsibilities and other relevant matters.

Most respondents looked forward to the reform of the ChiNext Board and the pilot implementation of the registration-based system. The reform matters that they were most concerned about were, “supporting more growing companies in getting listed and further sharing innovation dividends” (34.0%), “improving and strictly implementing the delisting system and facilitating the winnowing mechanism by the market” (23.8%) and “enhancing responsibilities of issuers and intermediaries and strengthening protection of small and medium investors” (18.1%), respectively.

VII. Of the institutional arrangements for investor protection in the new Securities Law, establishing a “securities class action system with Chinese characteristics” was the most anticipated. Of the measures aimed to improve the quality of listed companies, cracking down on lies and account manipulation received the most attention.

Respondents thought that there were many highlights on strengthening investor protection in the new Securities Law. The institutional arrangements that respondents expected the most to be implemented were, “establishing a securities class action system with Chinese characteristics” (62.4%), “significantly raising the cost of violation of securities laws and regulations” (50.8%) and “improving the cash dividend distribution system for listed companies” (42.8%) respectively.

Respondents paid much attention to the improvement of the quality of listed companies. The most anticipated reform measures were, “cracking down on lies and manipulation of account” (71.4%), “improving information disclosure by industry and strengthening effectiveness of information disclosure” (64.3%) and “improving the delisting mechanism and promoting clearing of zombie enterprises” (42.0%) respectively.