China Margin Trades Buckle Leaving $364 Billion at Risk
Investors look through stock information at a trading hall in a securities firm in Shanghai on June 19, 2015.
Photographer: Pei Xin/Xinhua via Getty ImagesThis article is for subscribers only.
The biggest tumble in Chinese shares since 2008 is proving especially painful for margin traders as their favorite stocks sink faster than the benchmark index, raising the risk of forced liquidations.
The 30 equities in Shanghai with the highest levels of margin debt relative to tradable shares have dropped 17 percent on average since the market peaked on June 12, versus a 13 percent decline for the Shanghai Composite Index. Margin positions on the city’s bourse fell for the first time in a month on Friday, a sign that leveraged investors are unwinding bets after they grew more than five-fold in the past year.