China's stock market maneuver: Suspends lending of restricted shares amid market instability

Restricted shares are generally offered to company employees or specific investors with limits on their sales. However, these shares may be lent to others for trading purposes, such as short selling, which can exacerbate market pressure during extended market downturns.

The CSRC argues that the decision on Sunday to halt the lending of restricted shares aims to provide every category of investors with more time to assess information and aid in establishing a more equitable market order.

Actions taken by Beijing, including reducing bank reserves, successfully raised the markets from five-year lows seen at the start of the previous week. However, the markets once again declined on Friday, revealing deep-seated investor pessimism regarding market prospects and an unstable economy.

Analysts and investors concur that Beijing needs to deploy further stimulatory measures to boost both consumer and business confidence.

Chinese stock markets suffered decreases in 2023, a trend that has carried over into 2024.

Although the CSI300 index, a collection of China's largest companies, has partially rebounded, it remains more than 3% lower than last year. In contrast, global stock markets experienced a highly successful year, with Wall Street indices reaching new historical highs recently.