Market Updates
Shanghai Index Plunges 7.7% on Margin Lending Curbs
Bikram Pandey
19 Jan, 2015
New York City
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Shanghai market index plunged 7.7% after the Chinese regulator curbed margin lending in an attempt to arrest the 40% rise the index in the last three months.
Shanghai market index plunged 7.7% after the Chinese regulator curbed margin lending in an attempt to arrest the 40% rise the index in the last three months.
China Securities Regulatory Commission cracked down on margin lending and placed a temporary ban on financing for the three largest brokerage firms.
Trading volume had soared to an unsustainable level in December to 77 billion renminbi or nearly $12.5 billion and has recently dropped but still at elevated level of 22 billion renminbi.
Three state controlled and largest brokerage houses facing temporary ban included Citic Securities, Haitong Securities and Guotai Juan Securities.
Citic released a statement on Sunday and announced number of new measures to limit risk in its margin finance facility and also revised higher minimum account assets for margin facility to 500,000 renminbi or $81,000 from 300,000 renminbi.
Investors are also awaiting economic growth data tomorrow and economists are estimating the growth to slow down to the slowest pace in the last two decades.
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