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On September 17, the margin trading balance in China surged to an all-time high, fueling the Shanghai and Shenzhen stock markets to reach short-term peaks before pulling back and closing lower. Industry experts suggest that the ongoing battle between bullish and bearish forces may persist for a while, but the overall long-term market outlook remains positive.
The Shanghai Composite Index dropped 1.15 percent to close at 3,831.66 yesterday, after earlier reaching its highest point since August 2015 at 3,899.96. Similarly, the Shenzhen Component Index fell 1.06 percent to finish at 13,075.66, after hitting a high of 13,328.10 during trading hours — the highest since March 2022. Meanwhile, the ChiNext Index declined 1.64 percent, closing at 3,095.85 after climbing to 3,168.68, marking its peak since October 2024.
The margin trading balance across the Shanghai and Shenzhen markets, a crucial indicator of market sentiment and leverage, hit a record CNY2.4054 trillion (about USD 337.6 billion) on September 17. The most popular sectors included electronics, power equipment, non-bank finance, and technology companies.
This increase in margin trading has coincided with a rise in retail investor activity. Data shows that the number of individual investors grew by 0.6 percent from September 1 to September 17, reaching 7.66 million.
“Volatility during rapid market rallies is typical; it doesn’t necessarily signal the end of the upward trend,” commented a researcher from a leading securities institute. He added that both short and long position traders will continue to compete, and while the market may not experience a significant, sustained correction, it will take time to establish a further upward trajectory. The sharp rally observed in August could transition into high-level fluctuations.
Value stocks and blue-chip shares remain appealing due to their stable cash flows and improved interest rate spreads. Although technology stocks may face downward pressure without additional easing policies, the medium- and long-term prospects for the market are still optimistic.
Some market strategists believe that the current rally isn’t over yet, and the Chinese stock indexes could reach new heights before the year concludes.
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