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CHINA STOCKS
Monday’s data points to the largest percentage fall in Chinese equity margin usage since ’16, as the space remained under pressure.
- A quick reminder that we have previously flagged that this data has suggested that the liquidation of levered positions (forced margin calls, although the CSRC have pushed back on the idea that forced margin calls have been widespread) has factored heavily into the recent sell off in Chinese equities, albeit with margin usage and the liquidations paling into comparison when compared to what was seen during the ’15 equity market meltdown.
- In view of this, after hours on Monday saw the CSRC note that it will guide brokerages to adjust margin calls and maintain flexible liquidation lines, which factored into a broader round of support outlined between then and Tuesday, resulting in a meaningful uptick in Chinese equities.
- We will continue to monitor margin dynamics in the time ahead.
Fig. 1: China Outstanding Margin Balance (CNY 000 Mn)
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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