China’s securities regulator clamps down on speculation to prevent sharp swings

China’s top securities regulator has signalled it wants a slower, longer-lasting stock market rally rather than a short-lived speculative surge as it steps up measures to curb excessive trading after activity and margin financing hit fresh highs early this year.

The stance, reiterated at a securities watchdog meeting last week, drew renewed attention after regulators moved to cool pockets of overheating in the A-share market following a strong start to 2026.

At its January 15 work conference, the China Securities Regulatory Commission (CSRC) said it would take a tough approach against excessive speculation and market manipulation, while stressing the need to “prevent sharp market swings”. The regulator said maintaining market stability remained a priority even as investor sentiment improved.

Mainland China equities rallied in early January, with trading volumes surging and margin financing balances repeatedly hitting record highs. The CSI 300 Index has risen 2.2 per cent so far this year, extending gains after a strong rally in 2025, while the Shanghai Composite Index ended 17 consecutive sessions of positive daily returns on January 12. Both benchmarks have recorded double-digit gains for two straight years.

Artificial intelligence-related stocks, commercial space and other emerging technology themes have led the surge, lifting momentum but also heightening concerns over leverage-fuelled speculation.

AI-related stocks and other emerging technology themes have led the surge in mainland China equities. Photo: Reuters

Regulators responded last week by raising margin financing requirements to 100 per cent from 80 per cent across mainland exchanges, effective on Monday, in a move widely seen as a targeted effort to rein in leverage and avoid excessive speculation.

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