New | China says impact of crackdown on margin financing should be limited

The China Securities Regulatory Commission (CSRC) reassured investors the ongoing crackdown on grey-market margin financing would not weigh on share prices significantly after another sell-off on Monday sent China stocks slumping the most in three weeks.

 Only 6.33 per cent of the accounts "cleaned up" by the securities regulator in its months-long margin lending curb were liquidated, while more than three-fourths of them were only urged to change their means of share trading, CSRC spokesman Deng Ge said in the securities watchdog’s official microblog. 

The late-night announcement came after the benchmark Shanghai Composite plunged as much as 4.7 per cent on Monday in wake of weak economic numbers that pointed to a sharper slowdown.

Meanwhile, concerns have been expressed in recent Mainland China media reports that Beijing’s steep clampdown on margin loans, which allowed investors to place leveraged bets on stocks, further dried liquidity from the shaky market as more investors chose to sit on the sidelines.

“So far, most of the owners of those trading accounts have followed our instructions and cleaned up the accounts by themselves. With the current pace and approach, [the crackdown] will not put heavy downward pressure to the markets,” Deng said.