Beijing Orders Top Broker ‘Citric’ to Suspend Short-Selling amid Market Rout

China’s largest brokerage, Citic Securities, has restricted short-selling for some clients following noticeable losses in local stock markets.

The report was first made by Bloomberg on Friday, citing people with knowledge of the matter. Not only did Citic Securities stop lending stocks to investors, it also raised requirements for institutional clients earlier this week as well, which turned out to be instructions from regulators.

The mainland stock exchange index, Shanghai Composite, was down 5% since the beginning of this year despite signs for improving economic outlook for the world’s second largest economy.

It has been widely reported that the Chinese government normally tightens short-selling in times of high volatility. October last year was the latest attempt by the authorities to tighten rules on short-selling to quell a market rout.

Last week, Beijing reportedly told its major brokerages to support local stocks and funds by purchasing exchange-traded funds off the open market.


Mr. Koraphat Vorachet, Krungsri Capital Securities’ Strategist, stated that the move is positive to stocks related to China in the same manner when South Korea issued the ban. He recommended SCGP (TP 42.0), IVL (TP 30.0), PTTGC  (TP 52.0) and GLOBAL (TP 18.2).