Paying back a surge in margin finance has largely been blamed for the turmoil that swept through China's equity markets, wiping US$3.9 trillion off the value of shares at its worst point. The catalyst might well have been the amount of stock controlling shareholders had pledged as collateral for loans. The market value of stock pledge transactions has surged to 1.5 trillion yuan so far this year, more than was borrowed in all of 2014. "This is impressive, considering stock pledges have already registered 45 per cent and 37 per cent year-over-year growth in 2014 and 2013," HSBC analysts write in a new report.
