Bull Market On Leverage: Margin Trading To Enlarge Investor Risk

The bull market of the A share market is known as "bull market on the lever". One of its signs is the use of margin trading instruments, especially the use of financing wages.

For example, in December 19th, the balance between margin and margin in Shanghai and Shenzhen two cities increased to 10070 billion yuan, of which the balance of financing was about 10001 billion yuan, and the two broke through trillion yuan for the first time.

For the first time on Friday, the balance of financing once again hit a record high of 10063 billion yuan. In less than a year, the growth of the financing balance reached nearly 200%.

Margin and balance of financing have both broken through trillion yuan mark, which is undoubtedly a landmark event for the development of China's securities industry.

It not only marks the development of margin trading in the A share market, but also becomes an important force to promote the rise of the A share market.

Moreover, the "trillion" mark is not the limit of the financing business of brokers. The market analysis shows that the balance of securities financing can reach 2 trillion yuan or even higher in the future.

The rapid development of margin trading is gratifying.

But with joy, investors must see the potential hidden danger behind the rapid development of margin trading: the serious malformation of margin trading.

In fact, since the opening of the margin trading business in late March 2010, margin trading has been in operation.

The situation has become more and more serious.

In the balance of margin and margin of 10136 billion yuan as of last Friday, the margin balance is only 7 billion 300 million yuan, compared with the 10063 yuan financing balance.

The abnormal development of margin trading has deviated from the original intention of margin trading to a certain extent.

Margin trading is pushed forward as a short selling mechanism. It aims at changing the unilateral thinking of investors and making investors short to make money, so as to promote investors' early maturity.

But from the development of margin trading, margin trading is totally reduced to unilateral financing business, which is further strengthened.

Unilateral thinking.

Moreover, the abnormal development of margin trading is not conducive to the balanced development of the business, and is unfavorable to the healthy development of margin trading.

After all, under such abnormal development, the function of margin trading basically can not be brought into full play, and the so-called short selling mechanism is also empty.

More importantly, because investors are biased towards financing, investors are less interested in securities lending. As a result, the securities companies are less concerned about the securities lending business, but they are fully prepared for the financing business.

In this way, the development of margin trading is becoming more and more malformed. The final result is that many brokerages have no credit at all, and the securities lending business is in a state of neglect.

Over time, when investors need

At that time, it simply couldn't melt into the stocks that needed.

More importantly, the abnormal development of margin trading further magnifies the investment risk of investors.

Although the market is going to rise, huge financing is conducive to the rise of the market, and the investors in the financing operation can enlarge the profits.

But the stock market is unlikely to go up forever. There is no stock market in the world, and there are no stocks that only rise or fall.

And when the stock market falls, the losses for investors in financing operations are also magnified.

On this issue, the recent occurrence of the "Swan Island" and "Chengfei integration black swan event" in recent years can be said to have left a deep lesson for investors in financing operations.

As an investor, if there is no financing operation, no matter how many of the stocks hold down, there will be no explosion. However, because of the financing operation, it will be inevitable if the stock continues to stop.

And because of the abnormal development of margin trading, the securities companies can not afford to buy money. Once the stock market falls, it should be a good time to make money, but investors can only miss the opportunity to make money because they can not make short stock.

Especially when the situation of "Everbright Oolong refers", investors can not sell stocks bought on that day, and they can not melt into stocks to hedge risks. For small investors, they can only see their investment losses of buying stocks increase.

Therefore, for investors, the abnormal development of margin trading brings great risks to investors and even the whole market.

Especially in this case of abnormal development, the greater the balance of financing, the greater the invisible risk to investors.

Further speaking, the larger the balance of financing, the more demand for balanced development of margin trading.

The malformed development of the financing margin will eventually make the investors pay the price and endanger the normal development of the margin trading.