The new craze behind China's mega rally

The new craze behind China's mega rally. The last time China had a mega-rally was in 2007, when the Shanghai Composite nearly breached 6,100 (it's at 3,020 today). But while the momentum might feel the same, there's one enormous difference: leverage - and lots of it. Once the market began rising, leverage soared, says Chen Long, an economist at GaveKal. Chen notes that the outstanding value of margin positions in mainland markets is now 800 billion yuan - twice what it was July. The daily turnover of the CSI 300 index futures just topped 2 trillion, a fourfold increase in the space of a week. This mania for margin trading is a new thing. Back in 2007, Chinese stock regulators forbid leverage. But as part of an effort to open up financial markets, they've softened restrictions of late. In October, nearly 5 million retail investors had margin accounts, up from less than a million two years prior. Read the full article: (VIEW LINK)


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