▲Shanghai Stock Market, China (Yonhap News)
Chinese authorities, who are trying to revive the recently sluggish stock market, will implement a measure to completely ban the lending of restricted stocks for a certain period from the 29th.
According to Yonhap News, the China Securities Regulatory Commission (CSRC) announced this policy through the social media WeChat account on the 28th and said, “We will emphasize fairness and rationality and reduce the efficiency of stock lending.”
In particular, the Securities and Exchange Commission said it would “limit institutional advantages in the use of information and tools, give all types of investors more time to digest market information, and create a fairer market order.” In addition, it was made clear that this measure would be used to firmly crack down on illegal transactions, saying, “This is to implement the concept of investor-centered regulation and strengthen supervision of the lending of restricted stocks.”
According to the Securities and Exchange Commission, starting March 18, the efficiency of some stock lending in the stock refinancing market will also be restricted. A stock lending service refers to an investor who owns stocks lending those stocks and receiving a rental fee. Loaned stocks are used for short selling or institutional volume.
Regarding this announcement, Reuters said, “Restricted stocks are often provided to corporate employees or investors with a certain trading limit,” and “However, they can be loaned to others for trading purposes such as short selling, which could lead to a prolonged downturn in the stock market.” “If it falls into this category, it could increase pressure on the market,” he analyzed.
Reuters then commented, “The measures taken by the stock market meeting today came at a time when investment sentiment has not recovered despite a series of stock market stimulus measures.”
Meanwhile, the Chinese stock market fell 13% last year. Even in the new year, the decline is increasing due to foreign selling, a deepening real estate crisis, and unstable economic recovery.