22 March 2019

Margin trading, short selling top 400 bln yuan, paper says

Outstanding margin trading and short-selling accounts in China’s main stock exchanges were 400.4 billion yuan (US$65.1 billion) as of April 11, suggesting investors are taking riskier alternatives, Shanghai Securities News reported Monday.

Margin trading took the lion’s share with 397 billion yuan while short selling accounted for 3.4 billion yuan of the balance, the report said, citing data from the Shanghai and Shenzhen stock exchanges.

In April 2010, China launched a trial program for margin trading and short selling to introduce riskier investment tools to its massive but underdeveloped equity market.

Margin trading allows securities companies to lend money to investors to buy stocks while short selling allows these companies to lend stocks to investors to sell on the market.

Interest income from such trading is a key revenue driver for securities brokers. Last year, 20 brokerages made 9.37 billion yuan from such activity, accounting for 13.84 percent of their total income, the report said.

– Contact HKEJ at [email protected]


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