Analysis of the Impact of the Margin Requirement Ratio Hike on A-Share Market Liquidity and Leverage Levels

Based on the obtained market data and research reports, I will conduct a systematic in-depth analysis for you.

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On January 14, 2025, the three exchanges in Shanghai, Shenzhen, and Beijing simultaneously issued a notice to raise the margin requirement ratio for margin trading from 80% to 100%, and the policy will be officially implemented on January 19, 2025[1][2].

Indicator	Previous Rule (80%)	New Rule (100%)	Change Magnitude
Maximum Leverage Ratio	1.25x	1x	20% Reduction
Financed Amount with RMB 1 Million Margin	RMB 1.25 Million	RMB 1 Million	RMB 250,000 Reduction
Total Position with RMB 1 Million Margin	RMB 2.25 Million	RMB 2 Million	11.1% Reduction

This adjustment only applies to newly opened margin trading contracts. Existing margin trading contracts and their extensions before the implementation of the adjustment will still be governed by the original 80% rule[1][2].

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As of January 12, 2025, the balance of margin trading and securities lending in the A-share market reached approximately

, a record high; the single-day growth was about RMB 46.5 billion; the turnover of margin trading and securities lending was approximately , also hitting a record high[1][2].

• The market will go through a sentiment release period, and high-leverage sectors may see a 10%-20% correction[1]
• Trading volume may remain at a high level, but market divergences will widen, leading to fierce long-short games
• Some sectors and stocks that rely on margin trading speculation will face short-term funding pressure

• The ratio of margin trading balance to A-share free float market capitalization is only
  2.58%
  , far lower than the historical peak of
  4.72%
  [2]
• The market’s maintenance margin ratio is as high as
  288.77%
  , with overall risks under control[2]
• The proportion of leverage-funded capital will decline, and long-term capital and value investment will become the mainstream

Since 2025, margin trading business at securities firms of all sizes has shown significant growth, with the overall industry growth rate ranging from

[3]:

Type of Securities Firm	Business Performance	Representative Institutions
Leading Brokers	Outstanding capital strength and client resources	Huatai Securities, China Merchants Securities, Orient Securities
Regional Mid-Sized Brokers	Rapid growth, with some seeing 30%-40% growth	Changjiang Securities, Zheshang Securities
Individual Brokers	Margin trading funds exhausted, implementing quota restrictions	Hualin Securities, Sinolink Securities

In 2025, at least 8 securities firms have successively raised the scale ceiling for margin trading-related businesses, while some brokers (such as Hualin Securities and Sinolink Securities) have taken the lead in raising the margin requirement ratio to 100% to control risks[3].

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• New leverage capacity is directly reduced by 20%
  [1]
• The overall market leverage ratio will drop from 1.25x to 1x
• Effectively prevents market overheating risks and creates conditions for long-term healthy development

It is worth noting that although the margin trading and securities lending balance continues to rise, the ratio of margin trading turnover to A-share total turnover

[1]. This means:

• Although the current market leverage ratio is high, it has not reached the historical extreme level
• The policy adjustment is more of a
  counter-cyclical regulation
  measure rather than a crisis response
• It helps guide the market towards a ‘long-term, slow bull’ pattern

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• The ratio of margin purchase volume to total turnover reached
  10.3%
  in December 2025, higher than the annual average of
  9.8%
  [1]
• Some high-leverage, high-valuation sectors face correction pressure
• Local liquidity risks of “longs liquidating longs” may emerge

Sector Type	Risk Level	Cause Analysis
High-Valuation Theme Stocks	High	Concentrated leverage capital, high valuation correction pressure
Small-Cap Stocks	Relatively High	Relatively weak liquidity, high volatility
Brokerage Sector	Medium	Margin trading business restricted, but supported by performance
Low-Valuation Blue Chips	Relatively Low	Shift in capital preference, good defensiveness
ETF Index Funds	Low	Risk diversification, institutional allocation demand

• Effectively reduces the market leverage ratio and mitigates the cascading decline effect caused by margin calls[2]
• Enhances the risk resistance of the A-share market and promotes the return of the valuation system to value investment
• Aligns with international mature markets (most markets have a 100% margin requirement ratio)

• If leverage capital remains active in the future, further regulation cannot be ruled out[1]
• Measures may include adjusting the scope of margin trading targets and raising the margin requirement ratio for securities lending
• Uncertainty in policy expectations may increase market volatility

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• Reduce Leverage Positions:
  The leverage ratio for newly opened margin trading contracts has decreased, requiring a re-evaluation of leverage strategies
• Avoid High-Leverage Targets:
  Reduce allocation to stocks with high margin trading ratios and small-cap theme stocks
• Monitor Maintenance Margin Ratio:
  Closely monitor account risks to ensure sufficient safety margins

• Margin trading capital shows new characteristics in ETF allocation: fixed-income products and CSI Short-Term Bond ETFs are favored[1]
• Broad-based index ETFs (CSI 300, CSI 500) continue to receive net margin purchases
• Low-valuation, high-dividend value stocks will gain capital favor

• Low-valuation blue chips: strong defensiveness, good liquidity
• Broad-based index ETFs: risk diversification, suitable for regular fixed-amount investments
• Growth stocks with high performance certainty: focus on industrial upgrading directions

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1. Limited Liquidity Impact but Structural Divergence:
   The policy adjustment has a limited impact on existing funds, but the scale of new funds entering the market will be restricted, leading to structural divergence in the market.

2. Leverage Level Effectively Reduced:
   The margin requirement ratio hike directly cuts new leverage by 20%, helping to prevent market overheating risks.

3. Upward Potential Constrained but Trend Unchanged:
   Tight margin trading quotas at securities firms and policy tightening will restrict short-term market performance, but historical data shows that margin requirement ratio adjustments are not the decisive factor determining the broader market direction[2].

4. Long-Term Beneficial to Market Development:
   By reasonably managing market leverage ratio, the risk resistance of the A-share market is enhanced, promoting the market’s evolution towards a mature market.

Neutral with a cautious tilt. It is recommended to focus on defensive sectors with low valuation and high dividends, and avoid high-leverage, high-valuation theme stocks.

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[1] Eastmoney - In-Depth Research Report on the Impact of Margin Requirement Ratio Hike on A-Share Market (https://caifuhao.eastmoney.com/news/20260114143738860193110)

[2] CLS - After Two Years, Margin Requirement Ratio Returns to 100%: How Did A-Shares Perform After Previous Adjustments? (https://www.cls.cn/detail/2257341)

[3] CLS - New Margin Trading Accounts Hit a 10-Year High of 1.54 Million! Total Accounts Nearly Double Compared to 2016 (https://m.cls.cn/detail/2254540)