国际英语新闻：Margin trading, short selling trial fails to brighten market

BEIJING, April 1 -- The Chinese equity market fell on Wednesday despite the launch of the widely anticipated trial program for margin trading and short selling.

The benchmark Shanghai Composite Index declined 0.62 percent to 3109.1 points with the brokerage sector retreating 0.77 percent. GF Securities declined 1.35 percent to close at 55.55 yuan, the biggest loss among the listed brokerage houses approved by the regulator to engage in the pilot program for margin trading and short selling.

The new business, which allows investors to borrow money to buy securities or borrow securities to sell, made its debut on Wednesday but the first day trading was sluggish with most investors taking a wait-and-see stance. So far only four investors have engaged in the new business at Guotai Jun'an Securities, one of the six brokerages that received regulatory approval.

An investor monitors share movement at a brokerage in Huaian, Jiangsu province.

The securities regulator last month approved the first batch of securities firms, including CITIC Securities and Everbright Securities, to take part in the pilot program for the new business. Brokerages were required to have a net capital of at least five billion yuan in order to be qualified for the business.

Analysts said the mooted market response reflected the limited initial impact of the new financial instrument given the high threshold set by the regulator in an attempt to control risks.

The minimum trading margin was set at 60 percent and 70 percent for margin trading and short selling respectively. The regulator also set the interest rate for margin trading at 7.86 percent and the rate of stock borrowing fee at 9.86 percent.

"The market did not see a significant increase in trading volume which indicated that the amount of capital involved in the new business is too little to influence the overall market," said Liao Qing, an analyst at Haitong Securities.