Margin trading balances have seen a sustained increase, signaling a return of leveraged capital and raising the question of whether the A-share market's phase of "deleveraging" is complete. According to Wind statistics, margin balances rose for eight consecutive trading days from August 4 to 13, reaching 2.68 trillion yuan by August 13, an increase of about 73 billion yuan from the start of the month. This follows a period from early July to mid-July when margin balances fell for 13 consecutive days, reducing total scale by over 300 billion yuan.
Margin trading scale is often viewed as a "sentiment indicator" for market mood. The renewed inflow of leveraged capital prompts the question of whether the recent A-share adjustment has largely bottomed out. A strategy analyst noted that current margin balances are roughly in line with levels seen at the end of 2025, suggesting that high valuation "bubbles" in some sectors have been cleared, and the deleveraging process in A-shares is essentially complete.
Data shows that technology stocks remain the favorite among margin traders. Over the past half-month, the electronics sector, classified under the Shenwan primary industry index, received the highest net margin buying, reaching 19.3 billion yuan. During the same period, leading stocks in computing power and semiconductors, such as Shengyi Technology (300476.SZ), Shengyi Technology (600183.SH), and C Ultra Pure (301717.SZ), ranked among the top three in net margin buying, each exceeding 1 billion yuan.
Margin balances resumed their growth trend, with market performance showing a broad rally on Friday, August 14. The Shanghai Composite Index rose 0.01% to close at 3927.18 points, while the Shenzhen Component Index and ChiNext Index gained 0.45% and 1.12%, respectively. Trading volume on the two exchanges totaled 2.14 trillion yuan, down 0.41 trillion yuan from the previous day. Over the past half-month, the A-share market has continued to experience volatile adjustments, with the Shanghai Composite Index recovering from 3800 points at the start of the month to reclaim the 3900-point level.
Data from China Securities indicates that as of August 13, margin balances stood at 2.68 trillion yuan, including 2.65 trillion yuan in margin loans and 25.99 billion yuan in short-selling balances. Wind statistics show that from August 4 to 13, margin balances grew for eight consecutive trading days, with a cumulative increase of 73.192 billion yuan. During the same period, margin loans also saw eight consecutive days of growth, while short-selling balances fluctuated. A month and a half earlier, starting in early July, the A-share market entered a volatile adjustment phase, with the Shanghai Composite Index falling from a high of 4100 points to close above 3800 points at the end of July. In July, the Shanghai Composite Index fell 6.4%, while the Shenzhen Component Index and ChiNext Index dropped 16.21% and 23%, respectively.
During the market correction, leveraged capital experienced a sustained outflow. From July 2 to 20, margin balances fell for 13 consecutive trading days, dropping from 3.02 trillion yuan to 2.72 trillion yuan, a reduction of about 305.3 billion yuan. During this period, the largest single-day decline in margin balances exceeded 80 billion yuan. The latest margin data, as of August 14, has not yet been disclosed. However, data from the Shanghai Stock Exchange shows that on August 14, margin balances on the exchange were 1.37 trillion yuan, down about 1.3 billion yuan from the previous day.
Leveraged funds are flowing into tech stocks, with significant divergence in sentiment. During this wave of capital return, the electronics, non-ferrous metals, and pharmaceutical and biological sectors were the top three industries in net margin buying, reaching 19.318 billion yuan, 8.092 billion yuan, and 7.417 billion yuan, respectively. Other sectors like machinery, communications, and power equipment also saw net buying. In contrast, household appliances and textile and apparel experienced net selling, with amounts exceeding 40 million yuan. On an individual stock basis, three stocks saw net margin buying exceeding 1 billion yuan from August 1 to 14: Shengyi Technology (1.007 billion yuan), Shendi Technology (1.185 billion yuan), and C Ultra Pure (1.033 billion yuan). Other notable stocks like Cambricon Technologies (688256.SH), Longsys Electronics (301308.SZ), and GigaDevice Semiconductor (603986.SH) also saw net margin buying exceeding 700 million yuan. Industry leaders like Hengrui Medicine (600276.SH) and Ping An Insurance Group (601318.SH) also attracted significant interest, with net margin buying amounts exceeding 700 million yuan.
On the short-selling side, several tech stocks and industry leaders were targeted. From August 1 to 14, Gree Electric Appliances (000651.SZ) saw the highest net short selling, at 123 million yuan, followed by Shuanghui Development (000895.SZ) and Yunnan Baiyao (000538.SZ), with net short selling of 82.9861 million yuan and 82.848 million yuan, respectively. Zhongji Innolight (300308.SZ), Ping An Insurance Group, and Midea Group (000333.SZ) also saw net short selling exceeding 50 million yuan each.
Analysts argue that the risk of further deleveraging is manageable. The return of margin balances to a sustained growth trend raises the question of whether market sentiment has been repaired. A strategy analyst believes that after a month and a half of adjustment, the A-share market has completed its deleveraging phase and will continue to experience a "slow bull" market. He notes that current margin balances, maintained at 2.6-2.7 trillion yuan, are roughly in line with levels at the end of last year and the beginning of this year. "Most sectors have cleared their accumulated 'bubbles,' with AI and tech stocks experiencing the fastest leverage reduction," he said. Data shows that at the end of last year, margin balances were about 2.5 trillion yuan, growing to 2.6-2.7 trillion yuan by early this year, and exceeding 2.8 trillion yuan by early May.
However, some analysts caution that explicit leverage may not be fully cleared. Explicit leverage refers to traditional on-market and off-market leverage, while implicit leverage risk involves excessive liquidity pricing due to incremental funds. Zhou Junzhi, chief macro analyst at China Securities, believes that the overall deleveraging of on-market margins in A-shares is largely complete, except for a few previously overpriced industries. She notes that margin balances briefly exceeded 3 trillion yuan in late June, then fell to around 2.7 trillion yuan by July 23, with the proportion of margin trading volume in total A-share turnover dropping to around 8.7%. While margin loan balances and trading activity have declined significantly, the ratio of margin loans to circulating market value remains below 2015 levels, and account collateral capacity has not broadly fallen to forced liquidation levels. "This risk is not about excessive leverage in the entire market, but rather that leveraged funds are overly concentrated in tech growth sectors, which may still face pressure in some segments. Off-market leverage has also been largely released," Zhou said. She added that the period of greatest pressure for explicit leverage reduction has likely passed, making subsequent deleveraging risks manageable. To confirm whether deleveraging has ended, she suggests monitoring two factors: first, whether domestic margin selling and high-leverage sector catch-downs have stopped, and second, whether overseas AI trading can stabilize. "Margin balances have fallen nearly 10% from their June peak, with trading volume proportion dropping to around 8.7%. The fastest phase of deleveraging is likely over. However, concentration in tech sector margins remains high, and some previously strong sectors may still face catch-down pressure, so it cannot yet be confirmed that explicit leverage has been fully cleared," Zhou said.
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