In the current climate of ongoing volatility in the A-share market, characterized by accelerated sector rotation and heightened liquidity fluctuations, market risk appetite remains under significant pressure.
At this critical juncture, a leading brokerage, GF SEC, has made a notable move by announcing a substantial expansion of its margin financing and securities lending business, injecting nearly one hundred billion yuan in incremental leverage capacity into the fluctuating market, an action that has captured significant market attention.
On the evening of July 20, GF SEC released a board resolution announcement, stating the company had reviewed and passed a relevant proposal. This changes the total scale limit for its margin financing business from a fixed 190 billion yuan to not exceeding 2.5 times the company's concurrent net capital. It also authorizes the management team to dynamically adjust specific business quotas based on market conditions, changes in the company's net capital, investor demand, and other practical circumstances.
According to its first-quarter report, as of the end of Q1 2026, GF SEC's net capital stood at 113.1 billion yuan. Calculating based on the new 2.5x upper limit standard, the maximum scale of its margin financing business could be raised to approximately 282.75 billion yuan. Compared to the previous fixed ceiling of 190 billion yuan, this represents a one-time expansion of over 90 billion yuan, significantly broadening the potential space for incremental funds. This is also one of the largest single increases in margin financing quotas within the brokerage industry recently. Furthermore, this adjustment shifts the scale of GF SEC's margin financing business to a market-oriented pricing model linked to "net capital multiples," offering greater flexibility in business operations.
In 2026, other brokerages like Donghai Securities and Caida Securities have also adjusted their margin financing business scales. However, GF SEC is the first major brokerage to significantly raise its margin financing ceiling this year. The heightened attention to GF SEC's move is closely tied to the recent market's wide fluctuations.
On June 23, the balance of margin financing and securities lending in the A-share market surpassed the 3 trillion yuan mark for the first time, reaching a historic high. However, since July, following volatility in overseas markets, A-shares have experienced turbulence, leading to a decline in investor risk appetite. As of July 20, the combined margin financing balance for the Shanghai, Shenzhen, and Beijing markets had declined for 13 consecutive trading days, marking the longest streak of declines in nearly 23 months. At the close on July 20, the A-share margin financing balance was 2,697.8 billion yuan, down over 300 billion yuan from the historical peak set at the end of June.
Notably, the financing balances of some previously high-flying tech leaders have also declined rapidly during this downturn. Taking Demingli as an example: as a leader in the storage sector, its market capitalization has shrunk rapidly in this decline. As of July 20, its stock price had fallen 48.35% over the previous 10 trading days. During the decline, some leveraged investors selling to repay loans can trigger further price drops.
The historical peak for Demingli's financing balance occurred on June 30, reaching 12.96 billion yuan. By July 20, this had fallen to 7.919 billion yuan, a decrease of roughly 5 billion yuan.
Post-market data from July 20 for Demingli showed that Huatai Securities' Shanghai Putuo Jiangning Road branch sold 1.028 billion yuan in a single day, while its Shenzhen Shennan Avenue branch sold 325 million yuan.
Disclosure information from Demingli's first-quarter report shows that its fifth-largest shareholder, Li Donglin, newly acquired 3.2487 million shares in Q1. Furthermore, Demingli explicitly disclosed that 3.2210 million of Li Donglin's shares were held in a Huatai Securities client credit trading collateral securities account, with only 27,700 shares in a regular account.
If Li Donglin has not sold any of the Demingli shares held in his credit account, their market value at the July 20 closing price of 482.89 yuan would be approximately 1.569 billion yuan. Assuming a 150% maintenance margin ratio, the corresponding debt would be around 1.046 billion yuan, a figure close to the single-day selling amount from Huatai's Jiangning Road branch. Consequently, analysis on social platforms has speculated whether this fifth-largest individual shareholder might have faced a forced liquidation during Demingli's decline.
However, examining the stock's price chart and likely entry costs shows this "forced liquidation speculation" is unfounded. Demingli's highest price in Q1 was only 401.59 yuan, significantly lower than the July 20 closing price of 482.89 yuan. This means that the shares Li Donglin acquired in Q1, even after this nearly "halved" correction, are still in a profitable position as of now. With a sufficient cushion, they are far from breaching the minimum maintenance margin ratio for margin accounts, making forced liquidation by the broker highly improbable. Nevertheless, against the backdrop of receding sentiment after a sharp short-term rally and overall market weakness, concentrated profit-taking by funds, combined with negative feedback trading from leveraged positions, ultimately led to Demingli's deep short-term correction. This serves as a typical microcosm of the rapid deleveraging occurring in the tech growth sector during this period.
Against the backdrop of concentrated release of micro-level leverage risks in individual stocks, GF SEC's large-scale increase in its margin financing ceiling plays a significant role in stabilizing investor sentiment. Following this rapid risk release, market sentiment has shown signs of a potential shift.
Founder Securities points out that the main reasons for the recent market adjustment are twofold. On one hand, marginal tightening of overseas liquidity has pushed up the risk-free rate, lowering market risk appetite and putting pressure on equity valuations. On the other hand, the global AI industry has formed a highly specialized and deeply integrated division of labor, leading to significant cross-market linkage effects in tech stock performance. After significant gains in global tech assets in the first half, the South Korean market adjusted first due to leverage risks, and the spread of panic sentiment impacted A-share tech sectors.
Founder Securities believes this round of A-share market adjustment is a short-term fluctuation. First, this adjustment is not accompanied by a deterioration in fundamentals, which remain solid. In the first half of 2026, China's economy operated generally stable, with GDP growing 4.7% year-on-year, remaining within a reasonable range. Looking at listed company profitability, over 1,700 companies have disclosed performance forecasts for H1 2026, with over 700 expecting profit growth or a turnaround from loss. It is estimated that, driven by continued improvement in profits of industrial enterprise listed companies, the overall net profit growth rate for all A-share non-financial companies in H1 2026 will be 17.8%, continuing to rise from Q1. Second, after this adjustment, A-share market valuations have mostly retreated to reasonable or偏低 levels. Current valuations are generally within a reasonable range, and the market correction is more about sentiment digestion, lacking a foundation for sustained, significant declines. As external short-term disturbances are gradually digested, market sentiment is expected to gradually return to rationality.
Everbright Securities also notes that the Shanghai Composite Index possesses certain momentum for rebound and recovery in both the short and medium term. After concentrated release of pessimistic sentiment, markets typically gradually stabilize and recover.
Analyzing normalized sample data since 2016, Everbright Securities points out that in the 20 days following a single-day drop of over 3% in the Shanghai Composite Index, National Defense & Military Industry, Building Materials, and Beauty & Personal Care have shown the most pronounced rebound elasticity, with median gains of 7.9%, 4.7%, and 4.2% respectively, and corresponding上涨 probabilities all接近 or exceeding 70%. In the 60 days following such a drop, some consumer sectors performed notably well. Among them, Food & Beverage had a median gain of 9.8% with a上涨 probability of 72.4%; Beauty & Personal Care and Social Services had median gains of 4.9% and 4.7% respectively, with上涨 probabilities both接近 70%. The Electronics sector within Growth Manufacturing also performed well.
Therefore, Everbright Securities believes the short-term market may gradually rebound, advising investors to关注 sectors that historically performed well during market oversold rebounds. These include National Defense & Military Industry, Building Materials, Beauty & Personal Care, Food & Beverage, Electronics, and Social Services. From a medium-to-long-term perspective, as price transmission effects gradually manifest and industrial chain profit structures continue to optimize, the trend of A-share profit improvement is expected to continue, providing solid medium-to-long-term support for the market. Following the recent adjustment, the tech sector is有望 to see a recovery. In the medium-to-long term,关注 three main景气 lines represented by hard tech, including the Export Chain (Electrical Equipment, Machinery), Resource Products (Petroleum & Petrochemicals, Basic Chemicals, Nonferrous Metals, Coal), and Hard Tech/AI (Electronics, Communications, National Defense & Military Industry).
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