China

Firms Halt Margin Trading Financing for Shares of CITIC Securities and Ping An Insurance

Summary:

  • Chinese securities firms Industrial Securities and Huatai Securities have halted margin financing for the shares of CITIC Securities (600030.SS/6030.HK) and Ping An Insurance (601318.SS/2318.HK), reports nbd.com.
  • The two firms involved did not reveal details of the reasons for halting margin trading financing for these two shares. Local media suggests that total margin financing for these two stocks might have reached their limits. In order to control risk, securities firms avoid too much exposure to a single stock.

Why It Matters:

  • Ping An Insurance and CITIC Securities are the two most heavily traded companies which form the basis of margin trading financing in the Chinese stock market. Margin trading financing for Ping An Insurance has reached RMB 50 billion and RMB 40 billion for CITIC Securities.
  • Margin trading financing provides investors with leverage to speculate and it is regarded as a main driver for the booming stock market.