Short Selling in China Now Plunges To Surprising Records
Short selling in China now plunges to surprising records as regulation has led to the unwinding of downside bets in the stock market.
According to the data from China Securities Finance and Bloomberg, the outstanding value of shorted stocks on the mainland’s exchange declined to 23.2 billion yuan (around $3.2 billion) at the end of July, reaching a level not seen since May 7, 2020.
The value dropped 0.6% on July 31, marking the 15th consecutive day of declines, the longest such streak on record.
This unraveling came after the China Securities Regulatory Commission (CSRC) introduced a series of decisions last month aimed at curbing the practice of borrowing stocks for short-selling.
The CSRC suspended the securities-lending business of the state-backed margin finance company China Securities Finance and raised the minimum collateral that short-sellers need to pledge.
Short-selling has been in the regulator’s crosshairs over the past year, as it has been partly blamed for the prolonged downturn in China’s $8.5 trillion stock market.
The data shows a significant decline in the value of shorted stocks on China’s exchange, which coincides with the CSRC’s recent measures to limit short-selling activities, as the regulator aims to address the impact of short-selling on the country’s stock market performance.
However, China is not the only country that has targeted short selling to revive investors’ confidence.
In June, South Korea extended a ban on short-selling through the first quarter of 2025 “to prepare … systems intended to prevent naked short selling and to alleviate concerns about potential disruption in the market’s fair pricing function”.
In the same month, Thailand raised the market-capitalization threshold for the stocks that can be borrowed, making fewer stocks available to short sellers.
Recently, China’s securities regulator has promoted the head of their law enforcement division to the role of vice chairman to strengthen the oversight and regulation of China’s massive $5.1 trillion stock market.
Meanwhile, predatory short selling continues to be a large issue in the United States.
Also Read: Foreign Markets Are Now Imposing Bans For Illegal Trading
Other Stock Market News Today
Trump now says he will fire SEC Chair Gary Gensler, after making an appearance at this year’s Bitcoin conference in Nashville, Tennessee.
In his address at the Bitcoin 2024 conference in Nashville, Tennessee, former President Donald Trump made a direct appeal to the cryptocurrency community.
He promised to take several actions if elected, which are aimed at addressing the concerns of the crypto industry.
Specifically, Trump stated that he would put an end to the “persecution” of the crypto sector, which he attributes to the current administration’s “crusade” against bitcoin.
He also pledged to remove the chair of the Securities and Exchange Commission (SEC), likely referring to the agency’s heightened scrutiny and enforcement actions against various crypto companies and activities.
“On day one, I will fire Gary Gensler,” Trump said to a massive roar from the roughly 5,000 people seated in the audience.
“I pledge to the bitcoin community, that the day I take the oath of office, Joe Biden and Kamala Harris’ anti-crypto crusade will be over,” said Trump.
Furthermore, Trump promised to “free” a convict who is viewed as a martyr within the cryptocurrency community.
This is likely a reference to the case of a prominent figure who has been convicted and imprisoned, but is seen by many in the crypto space as a victim of unjust persecution.
This appeal to the crypto community is part of his broader effort to rally support from this influential segment of the electorate ahead of the 2024 presidential election.
However, investors in the stock market communities have also scrutinized Gary Gensler for his inactivity in tackling stock market manipulation.
Particularly in his disengagement from the MMTLP scandal.
What are your thoughts on Trump’s promise to fire Gary Gensler?
Leave your thoughts below.
Also Read: “The Game is Rigged”, Says Ex-Citadel Data Scientist
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