China’s biggest stock broker suspends short-selling as markets tumble- BBG By

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© Reuters– CITIC Securities Co Ltd (SS:), China’s biggest brokerage, restricted short-selling for some clients amid growing, outsized losses in local stock markets, Bloomberg reported on Friday citing people with knowledge of the matter.

The state-owned asset manager stopped lending stocks to individual investors and also raised its requirements for institutional clients earlier this week, following instructions from regulators, the Bloomberg report said.

The report comes as Chinese stock markets largely extended a 2023 rout into the new year, amid signs of little improvement in economic growth. The blue-chip index was among the worst-performing global indexes in 2023.

The Chinese government has consistently attempted to limit short-selling in times of increased volatility, and had reportedly tightened rules on short-selling as recently as October to quell a market rout.

Beijing was also likely instructing its big four state-owned brokerages to support local stocks by buying exchange-traded funds off the open market. China’s major indexes had rebounded sharply from multi-year lows on Thursday.

But the country’s state-owned asset managers may have limited headroom to keep supporting local markets. Fitch had earlier in January downgraded the ratings of the country’s big four asset managers, and had also put three of the four firms on watch for further downgrades, citing expectations of limited government support and a worsening decline in the property market.

Investors have called for more targeted, fiscal measures from Beijing to support the economy and improve sentiment towards markets. But the government has so far remained largely conservative with its stimulus measures.

Chinese markets briefly trimmed their intraday gains on Friday after the Bloomberg report, but were still nursing heavy losses for the week after weaker-than-expected data for the fourth quarter.

also barely edged past a 5% target set by Beijing, with a bulk of the growth coming from a lower base for comparison from 2022. Sentiment towards China remained weak in the absence of a widely expected post-COVID economic rebound, with recent readings showing that the country was still struggling with deflation.

The CSI 300 was down 0.3% and hovered above a near five-year low, while the fell 0.5% by 22:38 ET (03:38 GMT). Hong Kong’s index fell 0.3% on losses in mainland stocks.

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