China Regulator Plans to Allow Margin Trading, Short Selling (Bloomberg)

[norml]

China Regulator Plans to Allow Margin Trading, Short Selling

April 17 (Bloomberg) -- China plans to let investors buy stocks using borrowed money and sell shares they don't own, seeking to channel more of the nation's $4 trillion of bank deposits into the stock market and boost trading.

The China Securities Regulatory Commission may select five brokerages to start margin financing and short-selling services this year, according to a draft plan sent to the Shanghai and Shenzhen stock exchanges and obtained by Bloomberg News. The pilot program may be expanded to other companies later, it said.

The changes would generate revenue for brokerages and increase the funds available for investment as the government prepares to end a yearlong ban on public share sales, paving the way for offerings by companies including Air China Ltd. China is seeking to bring its stock market in line with global practices and sustain a recovery in benchmark indexes from eight-year lows last year.

``The move will inject blood into the stock market,'' said Qiu Zhicheng, an analyst at Haitong Securities Co. in Shanghai. ``It will alleviate concern that the market will be weighed down by listings of big companies and generate more trading commissions and interest income for brokerages.''


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http://www.bloomberg.com/apps/news?pid=10000087&refer=top_world_news&sid=aYsHlvF9bJE4

[newswolf56]

1. The forward-thinking Chinese are about to teach us a long-term lesson...

regarding capitalism and the meaning of Sun Tzu:

(1)-The Chinese have been saying for years now the world "must experience capitalism fully" before it can understand what is wrong with it;

(2)-The Chinese allow margin-buying to spiral out of control;

(3)-As in the Crash of 1929, margin buying eventually collapses the market;

(4)-The collapsing Chinese market sucks down the United States into its financial quicksand;

(5)-Nations with secure socioeconomic safety nets survive the crash;

(6)-The one industrialized nation with NO socioeconomic safety net, NO public transport system and NO public health system -- that is, the U.S. -- is thereby forced into total collapse;

(7)-Revolution inevitably follows.

(8)-China triumphs, abandoning capitalism as "an unfortunate necessity of an unfortunate time of struggle";

(9)-Communism wins.