randallchsu Posted May 7, 2015 Share Posted May 7, 2015 I think this gives a little bit explanation to the recent run ups in Chinese publicly traded stocks. "Margin trading had been piloted in (China) in 2010 and then fully implemented in October 2011. Brokerages, sensing more revenue opportunities, were more than happy to provide margin-trading accounts. Investors, who had largely never experienced margin before, lapped it up as margin lending grew." "Research by Macquarie Securities Group shows China’s margin-debt ratio at 8.2% of the free float. That easily exceeds the peak of 6% reached in the late 1990s in Taiwan, the second-highest level globally in recent years." "Trading funded by margin loans accounts for 25% of daily volume on the ChiNext, the market in Shenzhen where Chinese startups trade, according to estimates from UBS AG." http://si.wsj.net/public/resources/images/AM-BI665_CMARGI_16U_20150422053020.jpg Link - http://www.wsj.com/articles/debt-builds-in-china-stock-rally-1429785899 Link - http://knowledge.insead.edu/blog/insead-blog/margin-call-on-overleveraged-china-3808 Link to comment Share on other sites More sharing options...
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