China’s credit bounce ain’t going to last

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From Bloomie, following last week’s action by regulators targeting stock market margin lending:

Traders reduced holdings of Shanghai shares purchased with borrowed money by the most since June 2013 after regulatory efforts to curb margin lending sparked the biggest stock-market selloff in six years.

The outstanding balance of margin debt fell 1.9 percent to 752 billion yuan ($121 billion) yesterday, according to data from the Shanghai Stock Exchange. The city’s benchmark equity index sank 7.7 percent yesterday, the most since June 2008.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.