CHINA MARKET: Growing risks of regulatory intervention on leverage 

Head of China Research - Forsyth Barr Asia, Forsyth Barr Asia

David Millhouse

Head of China Research - Forsyth Barr Asia

Forsyth Barr Asia

Thematic (Sector/Industry)

China Financials / Thematic (Sector/Industry)

China barred brokerages from selling third-party financing products that help clients invest in stocks using borrowed money, such as umbrella trusts and those offered by peer-to-peer websites. Seeking to rein in the use of leverage to buy stocks, the China Securities Regulatory Commission also told brokerages they may not offer margin financing and securities lending to clients with less than 500,000 yuan of assets. Investors with assets of less than 500,000 yuan who opened margin-finance and securities lending accounts before Jan. 19 will not be forced to close their positions. Brokerages may not provide margin finance and securities lending to clients with a trading history of less than six months.<p><br></p>

China barred brokerages from selling third-party financing products that help clients invest in stocks using borrowed money, such as umbrella trusts and those offered by peer-to-peer websites. Seeking to rein in the use of leverage to buy stocks, the China Securities Regulatory Commission also told brokerages they may not offer margin financing and securities lending to clients with less than 500,000 yuan of assets. Investors with assets of less than 500,000 yuan who opened margin-finance and securities lending accounts before Jan. 19 will not be forced to close their positions. Brokerages may not provide margin finance and securities lending to clients with a trading history of less than six months. 

Haitong Securities Co Ltd (A) (600837 CH)

Chongqing Rural Commercial Bank (3618 HK)

Shanghai Pudong Development Bank Co. (600000 CH)

China International Capital Corporation (3908 HK)

Haitong International Securities Group (665 HK)

China Merchants Securities Co Ltd (A) (600999 CH)

China Pacific Insurance (Group) Co., (601601 CH)

Changjiang Securities Company (000783 CH)

China Development Bank Financial Leasing (1606 HK)

China Merchants Securities Co Ltd (H) (6099 HK)

CHINA MARKET: China barred brokerages from selling third-party financing products