Chinese Stock Margin Debt Plunges $11.7B, Biggest Daily Fall Since 2016
Margin debt on Chinese exchanges fell 2.8% on Friday, the largest daily decline since January 2016, as the Star 50 Index dropped 7.1% and the CSI 300 fell 3.6%.
Margin borrowing on the Shanghai and Shenzhen stock exchanges dropped by 2.8% ($11.7 billion) to $405 billion on Friday, marking the steepest one-day decline since January 2016. It was the fourth consecutive daily decrease, bringing the total unwinding to $36.9 billion.
The selloff was led by memory chip stocks, which had attracted heavy margin borrowing. Their sharp decline triggered margin calls, forcing investors to sell and accelerating the broader market slide. The Star 50 Index, tracking Chinese tech stocks, plunged 7.1% — its second-largest daily drop this year — while the CSI 300 fell 3.6%.
Chip-related equities have become a global source of market volatility, with this episode amplifying the broader correction.
Source: The Kobeissi Letter