China’s $1 Trillion Stock Rally Spurs Curbs from Brokers, Funds

A $1 trillion stock rally in China is sparking concerns over rising risks to investors, prompting some of the nation’s brokerages and fund managers to scale back financing and restrict purchases, Bloomberg News reported.

Sinolink’s margin increase was prompted by concerns over potential losses for clients should the sharp market rise reverse. (Photo: Lhzss8 Wikimedia Commons)

In the first such public move, Shanghai-based Sinolink Securities Co. raised its margin deposit ratio on new client financing contracts for some securities to 100%, according to a posted notice.

China had last approved a cut in the ratio to 80% from 100% in September 2023.

Meanwhile, several domestic mutual fund houses this week imposed daily purchasing limits on some of the year’s best-performing portfolios.

On Wednesday, the feeder fund for the GF Star Growth Index ETF capped buying at just 100 yuan ($14), one of the most restrictive measures yet during the rally.

Sinolink’s margin increase was prompted by concerns over potential losses for clients should the sharp market rise reverse, people familiar with the matter said, requesting anonymity as the deliberations were private.