China’s benchmark CSI 300 Index is still down 66 percent this year,

Nov. 11 (Bloomberg) -- China may have more work ahead to revive investors’ confidence in the world’s worst-performing major stock market after unveiling a 4 trillion yuan ($586 billion) stimulus plan.

The government’s announcement on Nov. 9 followed three interest-rate cuts in two months and the end of a tax on equity purchases. China’s benchmark CSI 300 Index is still down 66 percent this year, twice the drop of the Dow Jones Industrial Average.

A slowdown in Chinese growth may keep buyers away, said Nick Chamie, the Toronto-based global head of emerging-markets research at RBC Capital.

“You really need the retail investors to be jumping in with both feet in order to get the market hopping,” Chamie said. “I just don’t see that materializing over the next year or so as we get increasing reports of jobs losses, factories shutting down and slower growth and export activity.”

Gun Shy’

China’s gross domestic product expanded 9 percent in the third quarter, the slowest pace in five years. Exports may cool to 18.1 percent in October from a year earlier, compared with 21.5 percent in September, according to a Bloomberg News survey of economists. China’s stimulus package, worth almost a fifth of its output, is aimed at sustaining domestic demand as the credit crunch slows economic expansions around the world.

QFII Restrictions

About 8.9 million brokerage accounts were opened this year through October in China, compared with 38 million in 2007, when the CSI 300 surged 162 percent, according to the China Securities Depository & Clearing Corp. Last year’s rally pushed the index’s price-to-earnings ratio as high as 53.1 in October 2007, the most expensive valuation among the biggest equity markets. The P/E ratio has since tumbled by 76 percent to 12.7.

Individual investors accounted for 54 percent of the Chinese stock market at the end of last year, China Securities Regulatory Commission data show. Only 67 overseas institutions could invest a combined $10 billion in yuan-denominated securities under the qualified