China regulator suspends restricted share lending

The news: China's securities regulator will fully suspend the lending of restricted shares effective from Monday, in policymakers' latest attempt to stabilise the country's stock markets, Reuters reported.

The numbers: China's stock market tumbled in 2023 and has extended its slide in the new year, hitting 5-year lows amid relentless selling by foreign investors. The world’s second-largest economy grew 5.2% for 2023 but the comparison was flattered by a weak, lockdown-hit 2022 and the recovery has been highly uneven.

The context: Restricted shares are often offered to company employees or investors with certain limits on their sale, but can be lent to others for trading purposes, such as short-selling, which can add pressure on markets during a prolonged slump. The move will "highlight fairness and reasonableness” and restrict the advantages of institutions in the use of information and tools, the China Securities Regulatory Commission (CSRC) said on Sunday. The announcement is the latest in a string of supportive policies by Beijing including a deep cut to bank reserves last week. Chinese shares retreated again on Friday, reflecting deep investor pessimism over the outlook for markets and the shaky economy.