China Stocks Rebound After Regulators Imposed Additional Curbs On Short Sellers

Li Chen
11 Jul, 2024
Hong Kong

Stocks in Shanghai and Hong Kong jumped after securities regulators took additional steps to support markets amid weak economic data and a lackluster earnings outlook. 

The Hang Seng index and the CSI 300 index jumped between 1% and 2% after the China Securities Regulatory Commission lifted the margin requirement for short selling. 

The new margin requirement was raised to 100% from the current 80% for individual investors and to 120% for hedge funds. 

The regulatory agency also places additional restrictions on quant-trading firms to root out market speculators. 

The move from the regulatory agency comes after the state-backed financial firm's intervention petered out and the Hang Seng index dropped 11% from its peak in May, wiping out most of the gains since late January. 

Despite the current move by the regulatory agency, benchmark indexes are expected to resume their downward slide amid weak earnings expectations, a protracted property market slump, and weak consumer demand. 

Chinese Communist Party policymakers are scheduled to meet Monday for the four-day third plenum, where party leader Xi Jinping is expected to announce the policy framework for the next five years. 

The much-delayed policy meeting is likely to deliver a broader outline for economic reforms, a boost for technology development, and new incentives for foreign investors. 

However, market expectations for deep economic reforms are low. 

 

China Stock Movers 

The Hang Seng index soared 1.8% to 17,792.04, and the CSI 300 index added 1% to 3,464.53. 

Electric vehicle makers soared in active trading, and Li Auto, BYD, and Xpeng jumped between 2% and 7%. 

Baidu, Meituan, Alibaba Group, JD.com, and Tencent Holding advanced between 1.5% and 4%.