Tuesday, 04 August 2015 14:32
HONG KONG: Shanghai stocks closed up 3.69 percent on Tuesday amid a late spurt of buying after China’s two stock exchanges announced new rules to restrict short-selling, while Hong Kong ended flat.
The benchmark Shanghai Composite Index surged 133.63 points to 3,756.54 on turnover of 464.0 billion yuan ($ 75.8 billion).
The Shenzhen Composite Index, which tracks stocks on China’s second exchange, soared 4.76 percent, or 97.83 points, to 2,150.95 on turnover of 442.4 billion yuan.
Equities in Hong Kong ended flat, with investors encouraged by the announcement but still wary about cooler manufacturing data from the mainland and the United States.
The benchmark Hang Seng index ended 0.02 percent lower, down 5.3 points to 24,406.12 on turnover of HK$ 74.66 billion (US$ 9.63 billion).
Chinese shares listed in Hong Kong slumped the second-most among 93 global equity gauges in July, according to Bloomberg News, as the southern Chinese city continues to suffer collateral damage from a mainland market rout.
The Hong Kong dollar is also pegged to the greenback, so the city is hit with higher borrowing costs when rates are raised in the United States.
The Shanghai and Shenzhen exchanges said in separate statements late Monday that investors who borrow shares must wait until the next day to repay the loans, instead of settling the same day as under previous rules.
Short-selling — a bet that the price of a stock will fall — requires investors to borrow the stocks they do not own to carry out the deal, so obliging them to maintain their positions overnight exposes them to greater risk.
“It looks like all the government’s measures, including restrictions on short-selling, are working now,” Wu Kan, a Shanghai-based fund manager at JK Life Insurance, told Bloomberg News.
Some brokerages, including CITIC Securities, have halted their short-selling business due to the new rules, Bloomberg reported.
CITIC slightly retreated 0.10 percent to HK$ 20.55 and Huatai Securities was down 0.28 percent to HK$ 15.92 in Hong Kong.
Market watchdog the China Securities Regulatory Commission has already announced it is probing “malicious” short-selling, along with police.
“These measures have delivered a clear message of restricting short-selling,” Zhang Gang, an analyst from Central China Securities, told AFP.
“But transaction volume is still small. Whether the market has reached bottom and will stabilise is not clear yet,” he added.
