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The margin trading balance across China’s Shanghai and Shenzhen stock exchanges surpassed CNY2 trillion (USD275 billion) yesterday for the first time in ten years, according to official figures.
On that day, margin financing in these markets reached CNY2.0057 trillion, rising by CNY16.7 billion from the previous trading session. The last time the total exceeded two trillion yuan was July 1, 2015. In detail, the margin financing in Shanghai was approximately CNY1.021 trillion (USD142 billion), while Shenzhen’s margin financing stood at around CNY983.9 billion (USD136.8 billion).
Since early June, the margin balance has been steadily increasing. As of yesterday, it had grown by CNY219.5 billion (USD30.5 billion) from June 3, marking the first trading day of that month. Currently, margin financing accounts for 2.29 percent of the total free-float market capitalization of all mainland Chinese stocks.
Since June 3, seven sectors have seen margin trading exceed CNY100 billion (USD13.9 billion). These sectors include electronics, non-bank financials, computing, pharmaceuticals and biotech, power equipment, machinery, and automotive industries.
A rising margin debt typically indicates bullish market sentiment, as investors display confidence by borrowing more funds to increase their market exposure. During the 2015 bull run, margin balances hit record levels, fueling market overheating followed by a sharp decline.
However, the current market rally differs from that of a decade ago in several aspects, as reported by the Securities Times.
First, the margin debt as a percentage of the free-float market capitalization is 2.29%, significantly below the over 4% peak seen in 2015, suggesting that trading via borrowed funds remains active but not overly speculative.
Second, levels of securities short-selling and lending remain relatively low. As of yesterday, short-selling and lending figures stood at around CNY14 billion (USD1.9 billion), down CNY308 million (USD42.8 million) from the previous day.
Third, the number of investors participating in margin trading has almost doubled—from four million to approximately 7.5 million over the past decade. The range of eligible stocks has also expanded beyond mainboard shares to include the Shanghai Nasdaq-style Star Market and the Beijing Stock Exchange.
The outlook remains optimistic for the continuation of the upward momentum in mainland stocks. Zhu Chengcheng, an analyst at Founder Securities, pointed out that China’s GDP grew 5.3% in the first half of the year, reflecting a stable economy with resilient macroeconomic fundamentals.
He also noted that corporate profitability is nearing the bottom of its downturn and recent supportive policies aimed at reducing intense, self-defeating competition—often called “involution”—are expected to help profits rebound. Robust market liquidity and an improved risk appetite are additional factors likely to sustain gains in the mainland stock markets.
As of August 5, the combined margin financing and securities lending balance also exceeded CNY2 trillion (USD278.1 billion) for the first time since July 2, 2015.
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