Chinese Traders Reduce Leveraged Stock Bets

Chinese traders reduced leveraged stock bets on Monday by the most in two weeks as a stock plunge erased $613 billion in value.

The outstanding balance of loans backed by share purchases fell by 21.4 billion yuan ($3.4 billion) to 919.4 billion yuan on the Shanghai Stock Exchange, according to bourse data. The Shanghai Composite Index sank 8.5 percent on Monday, wiping out almost the equivalent of Italy’s entire equity market from mainland shares.

The decline in margin trading came amid concern authorities had eased back on measures to shore up stocks after a bear-market slump. The government hasn’t withdrawn support for equities and will continue to stabilize the market, China’s securities regulator said after trading closed.

China’s market capitalization is down some $3.3 trillion from last month’s peak, including a $613 billion decline on Monday, according to an index compiled by Bloomberg tracking companies with primary listings on the mainland. A five-fold surge in margin debt over the 12 months through June 12 had helped propel the Shanghai index to a more than 150 percent gain.

— With assistance by Shidong Zhang

Before it's here, it's on the Bloomberg Terminal. LEARN MORE