A-share margin balance drops 172 billion yuan in 11-day deleveraging streak

China's margin trading balance has shrunk for 11 consecutive sessions, the longest losing streak in 23 months, as brokerages push back against panic over forced liquidations.

China's margin balance fell for an 11th straight session to 2.86 trillion yuan, the longest losing streak in 23 months, as brokerages denied rumors of widespread forced liquidations.

"Current margin trading risks are broadly controllable, with no large-scale forced liquidation occurring," a brokerage risk management official told Shanghai Securities News. "Only individual accounts that triggered maintenance margin requirements have faced liquidation."

The balance dropped 293.4 billion yuan on July 16 alone, with融资余额 (margin loans) shrinking by 286.5 billion yuan to 2.84 trillion yuan. Over the 11-session period, total margin debt contracted by 1.72 trillion yuan. The Shanghai market saw its balance fall 145 billion yuan to 1.44 trillion yuan, while Shenzhen dropped 147.8 billion yuan to 1.41 trillion yuan. Beijing's bourse declined by 66.4 million yuan to 86.8 billion yuan.

The selloff in margin debt signals a sustained deleveraging process across China's equity market. If the trend continues, it could amplify downward pressure on stocks, particularly in sectors with the heaviest margin exposure. The next catalyst for a potential reversal will be any policy response or stabilization measures from regulators, though none have been announced.

Electronics leads sector deleveraging with 704.9 billion yuan in margin outflows

Of the 31 Shenwan industry sectors tracked by data provider Data Bao, 29 recorded margin loan reductions during the 11-day period. The electronics sector suffered the largest absolute decline, with margin loans shrinking by 704.9 billion yuan, or 10.9 percent. Power equipment followed with 203 billion yuan in outflows, down 8.2 percent, while machinery and equipment lost 132.3 billion yuan, a 7.5 percent decline. Non-ferrous metals fell 130.2 billion yuan, or 8 percent.

Only two sectors bucked the trend. Petroleum and petrochemicals added 2 billion yuan in margin loans, up 0.9 percent, while beauty and personal care gained 560 million yuan, a 1 percent increase.

At the stock level, 74.7 percent of all marginable securities saw their融资余额 decline. A total of 264 stocks recorded drops exceeding 20 percent. Changyu Group posted the steepest decline, with its margin balance plunging 67.1 percent to 140 million yuan. Datang Power fell 59.7 percent to 698 million yuan, while Jingyi Equipment dropped 52.7 percent to 299 million yuan.

On the upside, 18 stocks saw margin balances surge more than 50 percent. Yinuosi led with a 230.9 percent jump to 135 million yuan, followed by Xinhongye's 188.4 percent increase to 419 million yuan and Hengshang Energy-Saving's 187.6 percent gain to 109 million yuan.

In absolute terms, Cambricon Technologies saw the largest margin reduction, losing 4.6 billion yuan, followed by Deming Li's 2.4 billion yuan and Semiconductor Manufacturing International Corp.'s 2.1 billion yuan. On the buying side, Eoptolink Technology added 3.5 billion yuan in margin loans, the most among all stocks, while Dongshan Precision Manufacturing added 925 million yuan and China Resources New Energy added 863 million yuan.

This article is for informational purposes only and does not constitute investment advice.