On October 8, the Chinese stock market saw a staggering trading volume of 3.45 trillion yuan (approximately $488.6 billion), with leveraged funds making a quick entry. As of that date, the total financing balance on the Shanghai and Shenzhen exchanges reached 1.5 trillion yuan, an increase of 107 billion yuan from the previous trading day. This surge is being regarded as historically significant, and concerns are rising about a potential replay of the 2015 market crash following that year’s bull run.
According to arrangements by China’s clearing companies, new securities accounts opened during the National Day holiday (from October 1 to 8) became available for trading starting October 9. This indicates that many new investors are just beginning to enter the market.
Reflecting on the peak data from 2015, the Securities Times noted that back then, the financing balance exceeded 2 trillion yuan for nearly 30 trading days, peaking at 2.26 trillion yuan. Another crucial indicator during that time was the financing balance as a percentage of market capitalization, which reached over 4.3%. However, as of now, both the total financing balance and its share of market capitalization remain below the levels seen during the bull market of 2015.
To prevent the A-shares from entering another bull frenzy, Chinese financial regulators are reportedly providing guidance to commercial banks. They are emphasizing the importance of investor suitability management and protection, strengthening internal controls and compliance management, and strictly regulating the use of leverage. Regulators are also firmly maintaining the boundary that prohibits the illicit use of credit funds in the stock market.
