China’s short-selling activity slumps to 3-year low after regulator imposes curbs to bolster US$8.3 trillion stock market
- The outstanding value of shorted yuan-traded stocks in China has fallen to 51.7 billion yuan (US$7.2 billion), the lowest since July 30, 2020
- China’s policymakers have responded with a slew of measures to boost confidence in the nation’s stock market, which has lost US$3 trillion of value in the last one year
Investors in China’s US$8.3 trillion onshore stock market have trimmed their bearish bets to the lowest in more than three years amid curbs imposed by the regulator on securities lending and short selling activities.
The outstanding value of shorted yuan-traded stocks fell to 51.7 billion yuan (US$7.2 billion) on Wednesday, from 93.6 billion yuan six months ago, approaching the 51.6 billion yuan level not seen since July 2020, according to Bloomberg data.
A reduction in the volume of shorted stocks will come as a relief for China’s stock market, one of the world’s worst performers this year. Stocks available to short sellers have declined considerably since the China Securities Regulatory Commission (CSRC) issued the rules.
The restrictions will cap the volume of stocks that can be shorted and probably subdue short selling to some extent in the future, according to Fei Xiaoping, an analyst at Dongguan Securities.
