The wealthiest investors in China’s equity market are heading for the exits.

The number of traders with more than 10 million yuan ($1.6 million) of shares in their accounts shrank by 28 percent in July, even as those with less than 100,000 yuan rose by 8 percent, according to the nation’s clearing agency. While some of the drop is explained by falling market values, CLSA Ltd. says China’s rich have taken advantage of state buying to cash out after the nation’s record-long bull market peaked in June.

Investors with the most at stake are finding fewer reasons to own Chinese shares amid weak corporate earnings and some of the world’s highest valuations. With this month’s devaluation of the yuan adding to outflow pressures, bulls have started to question whether there’s enough buying power to prop up prices once the government pares back its unprecedented rescue effort - - a concern that contributed to the Shanghai Composite Index’s 6 percent plunge on Tuesday.

“The high net worth clients are the ones who moved the market,” Francis Cheung, the head of China and Hong Kong strategy at CLSA, wrote in an e-mail. “They tend to be more savvy.”

The median stock on mainland bourses traded at 72 times reported earnings on Monday, more expensive than any of the world’s 10 largest markets. The ratio was 68 at the peak of China’s equity bubble in 2007, according to data compiled by Bloomberg.

Earnings Miss

More than 62 percent of companies in the Shanghai Composite trailed analysts’ 2014 earnings estimates as the economy expanded at its weakest pace since 1990. Profits at Chinese industrial firms declined by 0.3 percent in June, versus a 0.6 percent gain in the previous month.

“There is not a lot of fundamental support for the A-share market,” Cheung said. “Earnings are weak.”

The ranks of investors with at least 10 million yuan in stocks dropped to about 55,000 in July from 76,000 in June. Those with between 1 million yuan and 10 million yuan declined by 22 percent, according to data compiled by China Securities Depository and Clearing Corp.

“Wealthy investors, who have been through bear markets, are better at exiting,” said Hu Xingdou, an economics professor at the Beijing Institute of Technology.

The Shanghai Composite has dropped 27 percent from its June 12 peak, after a 152 percent surge in the previous 12 months. While state buying has fueled gains over the past two weeks, China’s securities regulator said Friday that the government agency tasked with supporting share prices will reduce purchases as volatility falls.

Long View

For investors with a longer-term horizon, sticking with Chinese shares could prove “very lucrative” because the country’s economic growth is still stronger than many of its peers, according to Gerry Alfonso, a sales trader at Shenwan Hongyuan Group Co. in Shanghai.

“This lack of a clear trend in the market causes overreactions by investors,” he said. “Eventually the market will turn around.”

While they wait for stocks to recover, investors are finding alternatives in Chinese real estate and overseas markets. Data on Tuesday showed home-price gains are spreading, with the average value in 70 cities tracked by the government rising 0.17 percent in July from a month earlier, the third consecutive increase.

The yuan’s retreat to the weakest level since 2011 is increasing the allure of assets denominated in foreign currencies, according to Steve Wang, the chief China economist at Reorient Financial Markets Ltd. in Hong Kong. Yuan positions at China’s central bank and financial institutions fell by the most on record last month, a sign that investors are moving money out of the country.

“China’s capital outflow in July coincided with big investors selling shares,” Wang said. “Small players have been drawn in by government measures to support the market, while wealthy investors cut their stakes.”