Since 2026, the A-share market in China has seen a surge of retail investors attracted by the “money-making effect”. However, with a significant drop in new A-share accounts in August, the contrast between the “bull market” and “hard for retail investors to make money” has become increasingly evident.
Although the Shanghai Composite Index is still hovering around 3,900 points, the market is showing clear differentiation with many common stocks underperforming. The ability of retail investors to profit from this market trend is now being questioned.
Analysts believe that the current situation in the Chinese stock market is one where eight out of ten retail investors are losing money. The investment channels in China are limited, and both the real estate and stock markets have lost their past attractiveness to investors.
According to statistics from the Shanghai Stock Exchange, the number of new A-share trading accounts opened in August 2026 was 2.3973 million, a decrease of 9.72% from the 2.6554 million in July, and a 9.55% decrease compared to the same period last year. This is almost half the number of accounts opened in January, which was 4.9158 million.
At the beginning of 2026, with the 1-year RMB deposit rate falling below 1% and the gradual formation of a “money-making effect” in the stock market, residents accelerated their search for new investment avenues, leading to a significant influx of retail investors into the A-share market, bringing substantial incremental funds.
According to a report by Huatai Securities in January 2026, it was estimated that the A-share market in China would see a net inflow of about 1.6 trillion yuan in incremental funds. Residents’ savings moving into the market are expected to bring about 650 billion yuan in incremental funds, while the net inflow of funds from retail investors is estimated to be around 400 billion yuan.
Additionally, a report by Caixin at the end of January cited Goldman Sachs’ analysis, forecasting that about 2.2 million new A-share trading accounts would be opened monthly in 2026, with an average asset size of about 50,000 yuan per new account, resulting in a total new capital inflow of around 1.3 trillion yuan for the year.
In early April, according to a report by Caixin Finance, in March 2026, retail investors’ small-sum funds had a net inflow of about 1.25 trillion yuan, with approximately 4.6 million new A-share accounts opened in March.
Driven by incremental funds, the A-share market experienced a rapid rise in heat, with the prices of certain technology stocks notably increasing. As of September 5, the Shanghai Composite Index still maintained around 3,900 points, showing a 4.3% increase in August, indicating that the market momentum has not completely subsided.
However, many retail investors who entered the market earlier in the year have not been able to profit from this market trend and have incurred significant losses, contrasting with the notion of a “bull market”.
Chinese expert Mike Li, speaking to Dajiyuan, stated that the cumulative number of new A-share trading accounts opened in the first 8 months of this year reached 25.214 million, with only 2.3973 million accounts opened in August, marking a 9.72% decrease month-on-month and indicating a downward trend.
Data from platforms like East Money show that in the first half of 2026 (by the end of June), 79% to 82% of retail investors in A-shares (with investments below 100,000 yuan on average) were in a loss position, with around 80% of retail investors experiencing losses. The average return rate for retail investors in the first half of the year was -23.6%, with an average floating loss of 21,000 yuan per person, but this data is currently lacking official verification.
Mike Li pointed out that despite the Shanghai Composite Index holding near 3,900 points and rising by 4% in August, a large number of retail investors have not made money in the artificial “technology bull market” and have instead suffered significant losses.
According to Mike Li, the main reasons for the substantial losses are twofold: Firstly, the overall economic downturn in China has led to a decline in the business performance of listed companies. Relying solely on the speculation of individual “star technology” stocks cannot sustain the so-called “money-making effect” in the stock market. Furthermore, the lack of genuine long-term investment funds in the Chinese market results in more stock turnover, meaning that even in a rising market, it is not a broad-based increase.
Mike Li explained that the Chinese market experiences frequent sector rotation and fund switching, making it challenging for many retail investors to navigate effectively, leading to chasing gains and selling during declines. Consequently, they not only fail to make money but also incur additional costs from frequent trading in terms of stamp duty and handling fees.
“There used to be a saying: ‘Chinese stock market has seven losses, one flat, and one gain’; now it is eight losses, one flat, and one gain,” said Mike Li, pointing to the increasing number of losing retail investors.
A recent report by 21st Century Economic Herald described the significant decline in the number of new A-share accounts opened in August as the investors “putting on the brakes,” highlighting a sharp contrast with the performance of the A-share market in that month.
The report cited financial experts’ analysis, stating that the decrease in market trading activity and the diminishing “money-making effect” in August naturally affected the willingness of new investors to enter the market. Additionally, as August is typically a period of mid-year financial reporting, market uncertainty increased, intensifying the wait-and-see sentiment.
The report indicated that some experts believe that the trend in the Chinese stock market will remain positive after September, but others adopt a cautious attitude, suggesting that the market in September may be relatively chaotic, with increasing factors restricting valuation expansion, potentially slowing the upward pace, and requiring investors to return to reasonable expected returns.
Another report by Caixin Finance cited data from January 2026, indicating that around 4.92 million new A-share accounts were opened, marking a record high in nearly a decade, with the market experiencing evident uptrends and high trading volumes.
Retail investors often enter the market after prices have risen, resulting in reduced profit margins, and once sector rotation occurs, they are prone to being trapped.
Market research has directly pointed out that the first half of 2026 was not a period of broad-based price increases but rather a highly differentiated market dominated by growth in technology stocks, thereby raising the difficulty level for traditional profit gains.
A recent report by Sina Finance published a research report by Dongxing Securities, stating that in the first half of 2026, the A-share market reflected index divergence, extreme industry fragmentation, and complete profit tiering, lacking the basis for a comprehensive broad-based increase. All excess returns were concentrated in the technology manufacturing sector, while traditional economic sectors continued to bleed.
In the first half of 2026, the Science and Technology Innovation 50 Index soared by 30.82%, while the Shanghai 50 Index fell by 3.86%, leading to a significant divergence between the two, marking the largest difference in six months since 2021. The report indicated that a K-shaped trend in the A-share market may become the new normal.
This outcome highlights that an increase in the A-share index does not equate to an increase in most stocks, and the rise of technology stocks does not necessarily mean gains for retail investors holding different stocks. The Shanghai Composite Index reaching 3,900 points and whether ordinary investors make money are entirely different matters.
The main reason for these contradictions is considered to be the formation of a “siphoning effect” in popular sectors such as AI, semiconductors, and robotics. Sectors like AI, computational power, semiconductors, communications, PCB, robotics, and high-end manufacturing have significantly attracted funds.
An investor survey by the Shanghai Securities Journal in August also indicated that 65% of respondents in the second quarter had bought high-tech stocks at higher prices, with individual investors holding an average of 27.55% in technology stocks, reaching a new high in almost two years.
As technology stocks strengthen, funding becomes more concentrated, leading to a lack of funds in other stocks. This ultimately results in a few stocks experiencing a massive surge, index growth, and overall market bullishness. However, many stocks suffer from a lack of funds, lagging behind or experiencing substantial declines.
Facing various abnormal occurrences in the first half of 2026 in the A-share market, Mike Li drew a parallel with the stock market crash of 2015.
He stated that during the 2015 “stock market crash,” as the stock market collapsed as a reservoir for absorbing excessive currency issuance, the Beijing authorities guided overflow capital into another reservoir – the real estate market. However, the current situation seems to be the opposite, attempting to create a “money-making effect” by channeling funds flowing out of the real estate market into the stock market.
He believes that due to the narrow investment channels in China and the shrinking wealth of residents, both the real estate and stock markets have lost their previous investment appeal. In the future, the best course of action for everyone is to tighten their purse strings, reduce unnecessary expenditures. Faced with this situation, it is estimated that the Beijing authorities will need to stimulate the real estate market once again.