Shares fall amid worries of margin calls
Print Edition
SHANGHAI stocks fell again yesterday on growing concerns that margin calls may be triggered as investors use stock rights as collateral for loans, while poor economic data also cast a blow to confidence.
The Shanghai Composite Index ended 0.52 percent down at 2,735.56 points, narrowing an earlier slump of up to 4 percent after blue-chip oil stocks surged in the last half hour of trading.
PetroChina Co gained the most in three weeks in late afternoon trading on signs of government-backed funds buying shares.
The overall market ignored a rally in global equities and oil prices because investors were troubled by rising selling pressure from forced closure of margin loans.
Four Shenzhen-listed companies suspended trading in their shares yesterday as their major shareholders who have used stock rights as collateral are facing margin calls, the firms said in filings to the Shenzhen exchange.
Gao Ting, head of China strategy at UBS Securities, said investors are aware that if the market continues to fall, equities that have been pledged as collateral are likely to face significant selling pressure.
Weak industrial profit data also increased economic concerns. Profits of China’s industrial companies shrank 2.3 percent from a year earlier in 2015, a sharp slowdown from the 3.3 percent rise in 2014, the National Bureau of Statistics said yesterday.
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