FX.co ★ Chinese Stocks Struggle as Margin Financing Raised

The Shanghai Composite Index experienced a decline of 0.31%, closing at 4,126, whereas the Shenzhen Component Index saw an increase of 0.56%, ending at 14,249 on Wednesday. This shift occurred as mainland Chinese equities retraced earlier gains following the government's decision to raise the minimum margin requirement for stock purchase financing from 80% to 100%. This adjustment is part of Beijing's broader strategy to mitigate excessive risk within capital markets. This change follows a period where Chinese stocks reached multi-year highs earlier this year, accompanied by unprecedented trading volumes in mainland exchanges driven by anticipation of additional policy support and further advancements in the field of artificial intelligence. Global investment banks have adopted a more positive stance on Chinese equities, highlighting appealing valuations, favorable industry policies, and a robust earnings outlook. While stocks in the clean energy and defense sectors mostly declined, technology shares led the market's upward momentum.