The Chinese securities authorities announced on the 28th that they will completely ban the lending of limited stock for a certain period of time from the 29th.
According to Reuters, the China Securities Supervisory Commission (CSRC) said on its WeChat account, a Chinese social media, that it would “emphasize fairness and rationality and reduce the efficiency of stock lending.”
“It will limit institutional advantages in the use of information and tools, give investors of all types more time to digest market information and create a fairer market order,” the association said.
The move is aimed at “implementing the concept of investor-centered regulation and strengthening supervision on the lending of limited stocks,” he said, adding that he will firmly crack down on illegal transactions through this.
The association also announced that it will limit the efficiency of some stock loans in the stock refinancing market from March 18.
The stock rental service is when an investor holding a stock lends the stock and receives a rental fee, and the rental stock is used as a short sale or an institution’s quantity.
“Limited stocks are often offered to corporate employees or investors with a certain trading limit,” Reuters said. “However, they can be lent to others for trading purposes such as short selling, which can add pressure to the market if the stock market is in a long-term recession.”
He also explained that the move by the increase/decrease meeting came amid no recovery in investment sentiment even though the People’s Bank of China announced on the 24th that it would provide about 1 trillion yuan in long-term liquidity to the market by lowering the deposit reserve ratio by 0.5 percentage points from February 5.
“The authorities have come up with additional measures to stabilize the Chinese stock market, which has recently plunged,” Reuters said, noting that analysts and investors point out that Chinese authorities should come up with more support measures to restore consumer and business confidence.
The Chinese stock market fell 13% last year, and the decline has been expanding in the new year due to foreign selling, deepening real estate crisis, and unstable economic recovery.
