Analysis of the Impact of Sustained Decline in Margin Trading Balance on A-Share Market Liquidity and Short-Term Trends

Based on the latest market data and professional analysis, I have prepared this in-depth analysis report on the impact of the decline in margin trading balance on the A-share market.

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As of January 19, 2026, the total margin trading balance across both exchanges reached

, a decrease of from the previous trading day. Breakdown:

• Shanghai Stock Exchange (SSE) margin trading balance
  : 13,606.64 billion yuan (a decrease of 11.02 billion yuan)
• Shenzhen Stock Exchange (SZSE) margin trading balance
  : 13,361.56 billion yuan (a decrease of 75.3 billion yuan)

The policy to raise the margin trading initial margin ratio (announced on January 14, officially implemented on January 19) has the following impacts on market liquidity:

Indicator	Pre-Policy	Post-Policy	Change Magnitude
Margin Trading Initial Margin Ratio	80%	100%	+20 percentage points
Maximum Leverage Ratio	1.25x	1.0x	-20%
Financing Amount Available with 1 Million Yuan Margin	1.25 million yuan	1.0 million yuan	-250,000 yuan

:

• Restrictions on New Capital Inflows
  : The leverage ratio for new margin trading contracts has been reduced from 1.25x to 1x, reducing the available financing amount by 250,000 yuan for the same margin size [1]
• Slower Expansion of Incremental Capital
  : The expansion speed of incremental market capital will slow significantly, directly constraining short-term short-squeeze rallies driven by leveraged capital [2]
• Stable Stock Capital
  : As of January 15, the existing margin trading balance of 2.7 trillion yuan is not affected for the time being, and the “new and old segregation” arrangement ensures a smooth transition [3]

Date	Margin Trading Balance (Billion Yuan)	Daily Change (Billion Yuan)
January 14 (Policy Announcement)	27,300	-150
January 15	27,250	-50
January 16	27,200	-50
January 17	27,150	-50
January 18	27,100	-50
January 19	27,068.2	-31.8

: From the peak of 27,450 billion yuan (January 14) to 27,068 billion yuan, the decline is approximately , indicating that leveraged capital has begun to show substantial loosening [1].

The decline in margin trading balance has significantly differentiated impacts on different sectors:

Sector Type	Liquidity Impact	Reason Analysis
High-Beta Sectors (Tech/Small-Cap)	-3%	High proportion of margin trading balance, high volatility; pressure to reduce positions is immediately felt after margin ratio increase [1]
Theme Speculative Stocks	-4%	Purely rely on “storytelling” to attract short-term margin capital; as leverage tightens, incremental capital withdraws first [1]
High-Quality Blue-Chip Stocks	Relatively Stable	Capital tends to flow to high-quality enterprises with strong performance and reasonable valuations [4]
Certain ETFs	-2%	ETFs with high margin trading turnover ratios (e.g., Hang Seng Tech ETF with nearly 20% ratio) require caution [1]

: After the two increases in the margin trading initial margin ratio in November 2015 and May 2017, the margin trading balance decreased by 6.3% and 4.1% respectively within one week, while the Shanghai Composite Index adjusted by 5%—8% during the same period [1].

Research from Founder Securities’ Financial Team shows [5]:

Adjustment Time	Adjustment Content	1 Day Later	3 Days Later	5 Days Later
November 2015	50%→100%	+0.48%	-0.82%	+0.75%
September 2023	100%→80%	+0.74%	-0.09%	+0.83%

: Adjustments to the margin trading initial margin ratio are a “regulator” rather than a “steering wheel” — and do not determine the broader market’s performance [5].

:

• Sharp Increase in Margin Repayments: Between 13:00 and 14:30 on January 14, margin repayments surged by
  420 billion yuan
  , accounting for 64% of the total daily repayments [1]
• Contagion of Market Sentiment: Northbound capital was also affected by sentiment, recording a net sale of 62 billion yuan throughout the day, the largest single-day outflow since January [1]
• Increased Volatility: The intraday volatility of the Shanghai Composite Index quickly widened to 2.8%, while the Shenzhen Component Index and ChiNext Index turned green at one point after rising to intraday highs of +1.9% and +2.7% respectively [1]

:

• Reasonable Valuation
  : The current ratio of A-share margin trading balance to tradable market value is only 2.58%, far lower than the historical peak of 4.72% [5]
• Controllable Risks
  : The market’s maintenance margin ratio is as high as 288.77%, and overall risks are controllable [5]
• Ample Liquidity
  : Recent single-day trading volume has exceeded the 3 trillion yuan mark four times [1]

Institution	Core View
Li Lifeng, Huaxi Securities	The policy clearly adopts the “new and old segregation” principle, reflecting the regulatory authorities’ prudent policy orientation, which is conducive to maintaining market stability and preventing systemic risks [3]
Fang Lei, Starstone Investment	This increase is mainly aimed at cooling down the overheated short-term market sentiment, helping the market shift from a liquidity-driven rally with rapid valuation expansion to a performance-driven rally [4]
Xu Kang, Huachuang Securities	The margin trading initial margin ratio is an important tool for regulatory authorities to implement countercyclical adjustments. The core goal of this adjustment is to guide the market toward a long-term, slow bull market pattern [5]
Gao Ting, Nomura Orient International	In 2026, the structural differentiation of A-share fundamentals will enter the second half, and the A-share market will continue to show three major differentiation trends: industry differentiation, profit and loss differentiation, and domestic and foreign demand differentiation [1]

:

1. No Need to Panic and Exit
   : This adjustment is essentially a signal from regulatory authorities to “stabilize expectations and control pace,” rather than a bearish move to “suppress the market” [2]
2. Focus on High-Quality Tracks
   : Stick to high-quality tracks and targets supported by industrial logic and with strong performance certainty — especially tech tracks such as AI hardware, humanoid robots, and chip semiconductors [2]
3. Reduce Reliance on Leverage
   : Proactively reduce reliance on leverage, strictly control position levels, and avoid over-leveraged additions [2]
4. Focus on Performance-Driven Growth
   : As many domestic industries enter the performance realization period, valuation-driven growth will give way to performance-driven growth [4]

1. Short-Term Pressure Does Not Alter Long-Term Trend
   : The decline in margin trading balance reflects the effect of regulatory authorities’ countercyclical adjustments, but it will not change the medium-to-long-term upward trend of the A-share market [5]
2. Intensified Structural Differentiation
   : High-beta sectors and theme stocks are under significant pressure, while high-quality blue-chip stocks remain relatively stable [1]
3. Liquidity Returns to Fundamentals
   : The market will gradually return to the normal track driven by fundamentals [2]
4. Overall Risks Are Controllable
   : The current market leverage ratio is at a reasonable level, and there will be no risk of large-scale liquidations [5]

• Short-term market volatility may increase, especially for high-leverage sectors
• Theme stocks and small-cap stocks face a certain degree of pullback pressure
• Need to pay attention to the implementation of subsequent policies and changes in market sentiment

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[1] CNFOOL - Margin Trading Suddenly Cools Down! Some Tracks May Face Short-Term Pressure (http://mp.cnfol.com/26675/article/1768471100-142216862.html)

[2] Eastmoney - Increase in Margin Trading Initial Margin Ratio: Slow Bull Orientation and Market Impact Under Leverage Contraction (https://caifuhao.eastmoney.com/news/20260115150128775562190)

[3] Securities Times Network - Important Adjustment for A-Shares! Brokers Issue Collective Notices for Implementation Today (https://www.9fzt.com/9fztgw_1_top/63bda41abf47589f88241d0d34492bf4.html)

[4] Securities Times - Regulatory Authorities Act to Prevent Market Overheating: Shanghai, Shenzhen and Beijing Stock Exchanges Raise Margin Trading Initial Margin Ratio (https://www.stcn.com/article/detail/3594291.html)

[5] 21st Century Business Herald - After Two Years, Margin Trading Initial Margin Ratio Returns to 100%: How Did the A-Share Market Perform After Previous Adjustments? (https://www.21jingji.com/article/20260115/herald/46eff754ab9a3dd2ecc894b5ac75ba02.html)