Chinese Margin Debt Hits Record as Risk-On Sentiment Spreads, Crypto Traders Stay Guarded
Chinese investors have borrowed a record 2.28 trillion yuan ($320 billion) to buy local stocks, signaling strong risk-on sentiment for global markets, though crypto traders remain cautious.
Bloomberg reports that China’s onshore margin trades surged past the previous 2015 high of 2.27 trillion yuan. Margin trading, which allows investors to borrow from brokers to buy equities, reflects both market confidence and appetite for risk.
The surge comes amid a strong equity rally: the Shanghai Composite Index has gained 15% this year, outpacing the S&P 500’s roughly 10% gain, while the CSI 300 Index is up 14%.
MacroMicro points out a key difference from 2015: today’s record comes amid slower economic growth. “CSI 300 at decade highs. Borrowed money chasing stocks in a shrinking economy,” the data tracker noted on X. The firm added that the current rally is more measured than 2015’s, with broader sector participation beyond AI and chips and a larger deposit base providing some support.
Yet deflationary pressures persist. Forward earnings are down 2.5%, making leveraged positions riskier if companies cannot raise prices. Any unwinding of margin debt could spark volatility, potentially impacting global markets.
Crypto Markets See Moderate Risk-On
Crypto traders are showing restraint compared with equities. Perpetual funding rates, a proxy for leveraged demand, indicate moderate bullish sentiment, hovering between 5% and 10% for the top 25 cryptocurrencies. This reflects a cautious approach, balancing optimism with risk management.
