China’s stock market rally is drawing closer regulatory scrutiny after trading activity surged to unprecedented levels, prompting officials to move to curb leverage even as many investors argue the bull run is still in its early stages.
Daily turnover across the Shanghai, Shenzhen and Beijing stock exchanges climbed to successive record highs Monday through Wednesday last week, according to Wind Information, a financial data service focused on China. Trading volume peaked at 3.99 trillion yuan ($556 billion) on Wednesday, surpassing the previous record of 3.48 trillion yuan set in October 2024.
The surge has revived memories of past market excesses, particularly the boom-and-bust cycle of 2015, market veterans told CNBC.
China’s regulators have responded by tightening margin financing rules, including raising collateral requirements on new margin trades.
Under the updated rules, which took effect on Monday, the margin requirement for credit purchases was lifted to 100% from 80% across the three bourses. This means that investors must now pay the entire cost of shares upfront, while keeping the trades under existing margin financing rules, effectively eliminating borrowing on new margin trades.
