The number of new investors in China increased at the weakest rate in 13 months in April, owing to a lack of positive momentum in the share market and lingering concerns about policy tightening.

As per the information from the China Securities Depository and Clearing Corporation Limited (CSDC), the number of new investors in the A-share market climbed by 1.7 million in April, or 3.1% year on year, the slowest pace since March 2020.

Total investors amounted to 185.6 million in April, increasing 12.5% year on year, as per the report.

The barometer CSI300 index finished up 2.4% on Friday but was still 14% behind its all-time high set on Feb. 18, as concerns about high valuations, policy tightening, and Sino-US tensions impacted emotions.

Since early March, when it fell as much as 17% from its high point, the index has traded in narrow bands, depressing investor enthusiasm for shares.

Analysts and traders predicted that the share market would stay rangebound, due to inflation concerns and the central bank's stiffening tendency, despite a robust economic recovery from the coronavirus epidemic.

As per Vanho Securities strategists, the central bank's stiffening will be moderate in the immediate term, but inflation forecasts will continue to impair market mood. Bank lending and wider credit in China declined more than anticipated in April, according to statistics released on Wednesday, as the central bank progressively reduces pandemic-driven support.

Ever since Chinese New Year in February, a metal coatings company in China's industrial heartland has seen price rises of up to 30% for raw materials such as steel, aluminum, thinner, and paint.

As per King Lau, who operates Dongguan-based Kam Pin Industrial Ltd in Guangdong province, the business has had little alternative but to pass on the majority of these additional expenses to its customers, even those in the United States.

“Our clients understand since it is occurring in many other industries, such as home appliances, mobile phones, and vehicles,” Lau added, alluding to price increases by Chinese exporters.

Investors are growing concerned that pandemic-driven stimulus initiatives will lead to global inflation skyrocketing, prompting central banks to tighten policy and potentially stalling the recovery.

With already-thin profit margins, Chinese companies are carrying on rising raw material and component prices to international customers, reinforcing the inflationary cycle.

Prices of Chinese goods imported by the US increased by 2.1 % in the fiscal year ending in April, the biggest 12-month increase since March 2012. Open the data at https://www.bls.gov/news.release/ximpim.nr0.htm.

In April, US consumer prices rose the greatest in nearly 12 years, indicating that higher prices are trickling into retailers.

“With supply-chain constraints in several industries and global demand slowly recovering (Chinese) manufacturers are progressively capable of passing on increased raw material prices to their international consumers,” said Frederic Neumann, co-head of Asian Economics Research at HSBC.

Costs of apparel and footwear on DHgate, a Chinese e-commerce website that helps small Chinese producers sell their items worldwide; have increased by roughly 30% year on year, whereas costs of mobility items such as scooters and bicycles have increased by up to 15%, as per the platform.

As per Beijing-based DHgate, the hike was caused by “dramatic” increases in raw material and chip pricing, and more expensive cross-border transport.

The readiness of Chinese firms to transfer on greater expenses to maintain profits contrasts with Japanese companies' unwillingness to boost selling prices and risk sacrificing market share.

“Chinese exporters have greater price power in global markets,” Neumann added.

Wang Zengda, manager of Trinx Bikes in Guangzhou, said that delivery timelines for several of his factory's orders are more than a year away, and clients are receptive to the possibility of renegotiating agreements as costs for aluminum and steel, that are used in bike frames, rise.

Soaring producer prices have piqued the interest of Chinese authorities, with the State Council, or cabinet, calling for appropriate steps to deal with dramatically increased commodity prices on Wednesday.

It didn't say anything about what the government will do to cope with growing prices. As per John Johnson, chief executive, China, at consultant CRU, if Chinese authorities wished to mitigate the effects of increased commodity prices, they might use a variety of policy levers, like freeing some commodity reserves, implementing price restrictions, and enforcing fines for hoarding.

“Higher producer prices will translate into higher import prices and CPI for the US and other major countries, but it will not be a big policy issue for the Chinese government,” Johnson said.