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China says Yes to short selling
26 Sep 2008
China has identified short selling as a potential saviour of its system just as Britain, the US and Australia crack down on the practice.
The Cabinet in Beijing today agreed to allow margin lending and short selling in a bid to lift trading volumes.
In Britain, the Financial Services Authority has threatened to impose unlimited fines on investors that breach its new ban on betting against bank shares.
The US Securities and Exchange Commission has curbed shorting on a range of stocks, and it is banned in Australia.
But China's government is betting that the liberalisation of their system will boost trading and offset risk.
The latest moves are part of an array of weapons being deployed by Beijing to support its markets.
Some, like short selling and margin lending, have their origins in the free market while others have their roots in China's command-economy past.
