Chinese Margin Debt Reaches Record as Risk-On Sentiment Extends Globally, Crypto Stays Measured
Chinese investors have borrowed a record 2.28 trillion yuan ($320 billion) to buy domestic stocks, signaling a risk-on mood in global markets, even as cryptocurrency traders remain cautious.
Bloomberg reports that margin trading in China’s onshore equity markets surpassed the previous 2015 peak of 2.27 trillion yuan. Margin trading, which allows investors to borrow funds from brokers to purchase stocks, is widely seen as a measure of market confidence and risk appetite.
The surge comes amid a strong equity rally. The Shanghai Composite Index has climbed 15% year-to-date, outpacing the S&P 500’s roughly 10% gain, while the CSI 300 Index has advanced 14%.
MacroMicro points out a key difference from 2015: the current high comes against a backdrop of slower economic growth. “CSI 300 at decade highs. Borrowed money chasing stocks in a shrinking economy,” the firm noted, adding that broader sector participation and a larger deposit base provide some support.
Still, deflationary pressures persist, with forward earnings down 2.5%, leaving leveraged positions vulnerable if companies cannot raise prices. A sharp unwind of margin debt could trigger significant market volatility with potential ripple effects globally.
Crypto Traders Cautious
While global equities show risk-on momentum, cryptocurrency markets remain measured. Funding rates for the top 25 cryptocurrencies—an indicator of leveraged positions—hover between 5% and 10%, reflecting moderate bullish demand while highlighting cautious positioning by market participants.
