Changpeng Wan
The Bull Market Resurgence
Shanghai’s brokerage offices buzz with renewed energy as the benchmark Shanghai Composite Index surges to levels unseen since August 2015. On August 18, 2025, the index closed at 3674 points – a milestone that triggered frantic calls to investment advisors like veteran Liu. “Haven’t seen this excitement since last year’s September 24 rally,” Liu remarked between client calls. The numbers tell a compelling story: trading volumes surpassed 2.7 trillion yuan, while the ChiNext Index soared 2.84%. This market awakening reveals a fascinating generational investing divide between fearless Gen Z entrants and battle-scarred veterans.
The Generational Investing Divide
Gen Z’s Fearless Entry
Zheng, a 22-year-old investor from Hangzhou, exemplifies the new generation’s approach. After earning 10% returns in a single morning by going all-in on financial technology firm Tonghuashun, he quipped: “My Qixi Festival gift money is secured!” His confidence reflects broader trends:
– July 2025 saw 196,360 new A-share accounts opened
– Year-to-date new accounts total 1.46 million (37% YoY growth)
– Retail investors comprise 99.5% of new entrants
Guojin Securities chief economist Song Xuetao (宋雪涛) notes: “Small-order capital inflows surged 39% monthly – clear evidence of retail investors’ enthusiasm.” This demographic views market participation through mobile apps as naturally as social media.
Veteran Investors’ Hesitation
Contrasting sharply with Zheng’s bravado, experienced investor Zhou maintains under 50% portfolio allocation despite the rally. “I’m still 15% underwater from last September’s volatility,” he admits. His caution stems from painful lessons:
– Memories of the 2015 leverage-fueled crash
– Whiplash from the 2024 “9.24” market correction
– Concerns about repeating “buying high, selling low” patterns
A major Hangzhou brokerage manager confirms: “We’re seeing existing clients reactivate accounts rather than massive new sign-ups. The generational investing divide in risk tolerance couldn’t be starker.”
Market Mechanics Behind the Rally
Capital Migration Patterns
Where is the 2.7 trillion yuan daily volume coming from? Banking sources reveal a significant “deposit migration” trend:
– Wealth management products now yield 10%
– Individual deposits shifted 9.66 trillion yuan year-to-date
– Private banking clients moving 3+ million yuan parcels into equities
Simultaneously, institutional participation intensifies. China’s insurance giants deployed 36.23 trillion yuan into markets – 17.4% annual growth according to financial regulator data. Foreign capital likewise increased A-share holdings by 87.1 billion yuan through Northbound channels.
Technical Market Indicators
The rally displays unusual characteristics versus historical bull runs:
– Volatility near historic lows despite index highs
– Sector rotation prevents concentrated bubbles
– Trading volume expansion remains gradual
China International Capital Corporation Limited (中金公司) analysts note: “This resembles 2017’s structural bull market more than 2015’s frenzy. The generational investing divide actually helps prevent overheating.”
Sustainability Analysis
The “Healthy Bull” Thesis
Industrial Securities champions the optimistic view, citing three pillars of sustainability:
1. Deliberate policy engineering for “slow bull” conditions
2. Sector rotation preventing systemic overheating
3. Institutional dominance ensuring measured participation
Their research shows only 23% of sectors at high crowding levels versus 47% during 2015’s peak. This dispersion creates what analysts term a “self-cooling mechanism” within the generational investing landscape.
Risks and Warning Signals
Citic Securities flags four cautionary indicators:
– Margin debt expansion exceeding price growth
– Small-cap valuations detaching from fundamentals
– New account openings accelerating exponentially
– Overnight repo rates spiking above 3%
“The generational investing divide could narrow dangerously if novices start leveraging,” warns UBS strategist Zhang Ning (张宁). Historical patterns suggest bull markets typically progress through distinct phases:
1. Rate-driven expansion (current phase)
2. Sentiment-driven acceleration
3. Earnings-validation climax
We currently sit at phase two’s beginning – the most volatile transition.
Strategic Approaches for Investors
Gen Z Opportunity Framework
Young investors should capitalize on their natural advantages:
– Time horizon allowing recovery from mistakes
– Comfort with digital tools for real-time monitoring
– Flexibility to invest smaller regular amounts
East Money Securities recommends: “Focus sectors where technological disruption meets policy support – particularly AI, fintech, and renewable energy supply chains.”
Veteran Investor Playbook
Seasoned market participants should consider:
– Rebalancing into uncrowded value sectors
– Using options for downside protection
– Allocating to Hong Kong dual-listed discounts
People’s Bank of China Governor Pan Gongsheng (潘功胜) recently hinted at continued monetary support, suggesting defensive investors might overweight:
1. State-owned enterprise reform beneficiaries
2. High-dividend infrastructure plays
3. Consumer staples with pricing power
Navigating Market Crosscurrents
This bull market presents unique characteristics through its generational investing divide. New investors’ fearlessness provides momentum while veterans’ caution prevents reckless exuberance. The 100 trillion yuan market capitalization milestone signals China’s financial maturation, yet sustainability hinges on earnings growth materializing in H2 2025.
Investors of all generations should now: verify corporate guidance against actual Q3 results, monitor margin debt levels weekly, and maintain exposure to multiple sectors. As the Mid-Autumn Festival approaches, the market’s direction may become clearer – but wisdom lies in respecting both generations’ approaches during this fascinating market moment.
