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Money

Initial impact of margin trading, short selling to be limited

(Xinhua)
Updated: 2010-04-02 14:07

BEIJING: The impact of margin trading and short selling on China's equity market would be limited in the short term, according to a report cited by Shanghai Securities News on Friday.

The launch of margin trading and short selling would help increase the liquidity in the equity market, but the impact on the overall market would be limited in the short run given its small trading volume, a report by Guotai Junan Securities was quoted as saying.

Combined turnover of margin trading and short selling in the Shanghai and Shenzhen exchanges totaled 6.59 million yuan ($965,393) on Wednesday, its first trading day.

The volume was tiny in comparison with the combined turnover on the two bourses, which amounted to 219.76 billion yuan on the same day.

Yingda Securities took a more optimistic view, saying that the launch of margin trading and short selling was likely to inject 30 billion yuan into the A-share market in its initial stage.

China launched its long-awaited trial for margin trading and short selling this Wednesday, which would boost liquidity in the market and provide long-term benefits such as price discovery and hedging.