adminShanghai — China’s stock exchanges will double the margin requirement for buying stocks as leveraged bets fuel a rebound in the nation’s benchmark equity gauge.
Margin requirements will be raised to 100% from 50% starting on 23 November, the Shanghai and Shenzhen bourses said in separate statements on Friday. The rule change means that an investor with 1 million yuan in their account is limited to borrowing another 1 million yuan from a broker to buy more shares.
Previously, they could borrow up to 2 million yuan.
“That wasn’t expected by the market so investors will probably react negatively,” said Wu Kan, a Shanghai-based fund manager at JK Life Insurance. “The regulators want margin trading to increase in an orderly manner. Brokerages will probably bear the brunt.”
China stock-index futures dropped 2,4% at 10:50. The Shanghai Composite Index has climbed 22% from its August 26 low. — Bus24
Online Reporter