Beijing bars investors from lending securities during restricted periods, signalling further support for beleaguered stock market

The China Securities Regulatory Commission (CSRC) said that starting on Monday, there will be a “complete suspension of the lending of restricted stocks”, and it will also limit the “efficiency of securities lending” starting March 18.

The initiatives are being rolled out to “implement the investor-oriented regulatory concept and [to] strengthen the supervision of the lending of restricted stocks”.

The move suggests more policies to support the mainland’s bourses will be unveiled in the coming weeks and months, analysts said.

“In the past, some shares held by original shareholders or cornerstone investors had restrictions on sale,” said Kenny Ng Lai-yin, a strategist at Everbright Securities International. “However, they could still sell the corresponding shares in the market by lending their holdings. The new rule now restricts this situation, which helps reduce selling pressure in the market.”

While the policy is expected to have “a positive impact on the market”, its direct effect is likely to be limited, as the performance of the bourses hinges on various factors, including the investors’ view of the Chinese economy, geopolitical issues as well as global interest rates, Ng said.