Chinese Stocks Fall After Exchanges Tighten Margin Requirements

Chinese stocks dropped after authorities tightened rules on margin financing, signaling unease over the pace of a rally that has added $1.2 trillion in value over the past month alone.

Under the new rule, investors must now provide margin equal to the full value of the securities they buy on credit, up from the previous 80% threshold, according to a Shenzhen Stock Exchange statement. The move, which applies to Shenzhen, Shanghai and Beijing bourses, underscores regulators’ efforts to rein in potential froth in financial markets.