Mainland stockmarkets handing back postpandemic gains
Small investors play outsized role, say they are staying out
Deposits swell in flight to safety

SHANGHAISINGAPORE, May 30 Reuters The last great hope for China39;s faltering postpandemic rally is fading as the nation39;s legion of smalltime investors turns bearish on equities to double down instead on safer assets amid a stuttering economic recovery.

Brokers and money managers had expected billions of yuan in excess savings would find their way to the stockmarket this year as the economy gathered pace and enough uncertainty remained over real estate to leave equities the only game in town.

Yet just as foreign cash has failed to materialise in China39;s stockmarket, nervous households are also turning their backs to pile into bonds and deposits leaving equity markets adrift.

After rallying 20 from October to January, Chinese blue chips are handing back gains and are down 1 yeartodate. The Hang Seng is at 2023 lows, and sovereign bond yields are falling . The easiest trade of the year is fizzling, and the lost momentum is keeping investors39; money out.

I am quite disappointed, said Eric Yu, a programmer in his 30s in Shanghai who39;s been investing for around three years.

I will not put any more money into stocks until all my losses are recovered, he said. Rather, spooked by the spectre of tech layoffs and youth unemployment, he has been putting some half of his monthly income into wealth and deposit…