China's largest broker stops short selling - China's stock markets under pressure

China's largest broker stops short selling - China's stock markets under pressure

According to a report by www.deraktionaer.de, China's largest broker has suspended short selling for some customers. This step is intended to curb the recent heavy losses on the Chinese stock markets. The Hang Seng Index alone has recorded a decline of around ten percent since the beginning of the year.

State-owned Citic Securities has stopped lending shares to individual investors and increased requirements for institutional clients under "window guidance" guidelines from regulators. Chinese stocks have extended losses from a torturous 2023 and show no signs of the downward pressure easing.

The Chinese government's measures suggest that the stock markets have not yet reached their cyclical bottom. Historically, a short ban typically does not result in a long-term bottom in stock markets. In 2015, China restricted short selling, but the Hang Seng continued its downward trend in the following months and did not hit its cyclical low until early 2016.

While the measures could stabilize markets in the short term, government efforts to support stock prices suggest that downward pressure could continue.

This development could continue to cause uncertainty in Chinese stock markets, particularly for technology stocks. Investors should closely monitor developments and implement appropriate risk management strategies to protect themselves from potential losses.