Bloomberg warns that margin debt on the Shanghai Stock Exchange “is sending equity volatility to five-year highs and may accelerate losses if a market reversal forces traders to sell.” The news service notes:

The outstanding balance of margin debt on the Shanghai Stock Exchange surpassed the trillion-yuan mark for the first time on Wednesday, a nearly fourfold jump from just 12 months ago. The city’s benchmark index has surged 86 percent during that time, more than any of the world’s major stock gauges.

The trouble is that SHCOMP volatility is last year’s news.

Volatility spiked at year end, but immediately fell back below 10%. The spike in volatility that worries Bloomberg evidently was a year-ed burst of trading. Volatility on the SHCOMP remains comfortably in the same 5%-10% range in which it has traded since 2011.

(Copyright 2015 Asia Times Holdings Limited, a duly registered Hong Kong company. All rights reserved. Please contact us about sales, syndication and republishing.)

Asia Times Financial is now live. Linking accurate news, insightful analysis and local knowledge with the ATF China Bond 50 Index, the world's first benchmark cross sector Chinese Bond Indices. Read ATF now. 

Leave a comment

Your email address will not be published. Required fields are marked *