The recent slump in Chinese equities has turned the stock market into an attractive investment option for investors. Pan Weiting says there is no better place to put her money than in stocks.

Pan shelved plans to buy an apartment after real estate prices jumped the most on record and the government banned loans for third homes to cool the economy. Interest on the 400,000 yuan she has in her bank account is being eaten away by rising inflation, and the country's regulations limit her investment choices to property or domestic equities.

"The stock market is the best choice at the moment," said Pan, a 27-year-old Shanghai accountant. "Even the bank staff advised me against depositing more money."

Government leaders sought to deflate a speculative bubble that London-based property broker Knight Frank LLP said sent property prices up 25 percent in the fourth quarter by curbing mortgage loans. It left people in the nation with the world's biggest savings with few places to put their money.

US investment bank JPMorgan Chase & Co expects China stocks to rally more than 40 percent in a year while Robeco Group, an asset management company in the Netherlands, forecast a second-half rebound.

"It becomes a question of who is the least ugly girl at the fair," said Victoria Mio, a Hong Kong-based senior fund manager at Robeco, whose firm oversees US$194 billion worldwide. "There is some migration occurring and the shift will accelerate with a few months of negative interest rates."

As much as $59 billion, about a third of the housing transaction volumes in the 35 biggest cities in 2009, may be diverted from property to equities this year, according to Citic Securities, China's biggest listed brokerage.

China's US$7.2 trillion of corporate and household savings is being eroded as inflation rises. The nation's inflation rate is forecast to climb 3.4 percent this year, according to the median estimate of 18 economists surveyed by Bloomberg on May 11.