Huang Shi got the message.

The media campaign "did influence my purchase", said Huang, 26, who works in the finance industry in the northeastern city of Harbin, after shifting more than 20,000 yuan (HK$25,100) into shares last week. "Also, our stock market had slumped for so long."

Mainland policymakers are trying to rekindle interest in stocks after the Shanghai Composite Index lost US$460 billion of market value in the three years to May, the most worldwide, and investors liquidated almost five million trading accounts. A shift towards equities may help the government reduce speculative investing in the property market and curb risks tied to lightly regulated wealth-management products, whose assets rose to a record US$2.1 trillion in the first half.

The government's promotion of shares, which follows forecasts for gains this year from brokerages including Citigroup and Morgan Stanley, may already be having an impact.

The Shanghai Composite rose to a 15-month high yesterday and has gained 12 per cent since the end of May, fuelled by speculation the mainland economy is weathering its real-estate slump. After shrinking for 12 consecutive weeks to August 8 to the lowest level since March 2010, the number of equity accounts containing funds is rising while the pace of new account openings has doubled since May.

"The government is indeed encouraging stock investment," said Zeng Xianzhao, an analyst at Everbright Securities. "They need the market to be vibrant to encourage foreign funds into the country."

Xinhua's commentaries and news stories on equities included headlines such as "China needs a bull market with quality" and "How could the stock market be invigorated?"

Authorities said this month that fees for individuals and institutions opening share accounts will be reduced by more than half, while the futures exchange cut margin requirements for equity-index contracts on Monday.

Regulators also announced plans to allow investors to consolidate their accounts covering stocks, mutual funds and other securities. The Shanghai Stock Exchange said this week it is hosting presentations by 14 listed banks to improve transparency and cultivate investor relationships.

"The government wants to change peoples' outlook," said Ronald Wan, the chief China adviser at Asian Capital Holdings in Hong Kong. "A strong equity market is a prerequisite for healthy capital-market reform in China."

The combination of bullish coverage from state media and surging demand from local investors did not prevent shares from tumbling five years ago. While the nation's two largest financial newspapers published articles saying the rally would continue and new-account openings surged to an 18-month high in July 2009, the Shanghai Composite lost 23 per cent over the next 12 months.

Volatility in Chinese equities now may deter some investors from increasing holdings, according to Credit Suisse Group. The Shanghai Composite has posted average annual swings of 44 per cent in the past decade, while wealth management products offer annualised returns of about 5 per cent.

Chinese stock valuations are still low relative to history, which gives the market room to rally further as the economy improves, said Roxy Wong, a Hong Kong-based senior portfolio manager at Lombard Odier.

Equities comprised 4 per cent of Chinese households' total assets as of last year, according to a June report from Credit Suisse. Bank deposits accounted for about 22 per cent while property made up 55 per cent.

"You might even start to see retail money redirected to equities after years of chasing real estate," said Michael Shaoul, the New York-based chairman of Marketfield Asset Management.