China to launch stocks margin trade, short sales

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Shanghai, Oct 10: stock index futures, another reform which has been under consideration for years.

The commission did not specify exactly when margin trade and short-selling would start, or name the brokerages that would take part in the initial stage of the reforms. But many analysts say the first batch of brokerages will include CITIC Securities (600030.SS: Quote , Profile , Research , Stock Buzz ), the largest listed securities firm, and China International Capital Corp. Shares in CITIC Securities have jumped 52% since late last month because of such speculation.

“This will give investor confidence a short-term boost,” said Cao Xuefeng, analyst at West China Securities. “But the market's medium-term trend will continue to depend on global markets and on China's economic performance.”

The use of borrowed funds to buy stocks has been banned in China since the mid-1990s, when the practice fuelled rampant market speculation that triggered a government crackdown.