China Stocks Rally Amid Curbs on Short-Selling

China stocks rebounded after the securities regulator imposed new restrictions on short-selling and high-frequency trading. The measures, aimed at stabilizing the market, led to gains across various indices, with energy and tech stocks seeing significant increases. Hong Kong's Hang Seng index also saw substantial gains.

China stocks rebounded on Thursday after the securities regulator announced further curbs on short-selling to bolster market sentiment. Hong Kong stocks also jumped. The China Securities Regulatory Commission said on Wednesday that securities re-lending - in which brokers borrow shares for clients to short sell - would be suspended, while margin requirements would be raised for short-sellers.

The regulator also said it would further restrict high-frequency trading to ensure a fair market. The measures came after a disappointing June consumer inflation print further dampened stock market performance following two months of losses.

At the close, the Shanghai Composite index was up 1.06% at 2,970.39. The blue-chip CSI300 index was up 1.14%, with its financial sector sub-index lower by 0.67%, the consumer staples sector up 1.91%, the real estate index up 2.09% and the healthcare sub-index up 2.78%. New energy stocks advanced 3.6% to lead the gains. Indexes tracking smaller firms outperformed as the short-selling curbs and restrictions on high-frequency trading benefit mid- and smallcaps more. Shenzhen index ended up 2.35% and the start-up board ChiNext Composite index was higher by 2.06%. CSI 2000 jumped as much as 3.4%. In Hong Kong, the Hang Seng index was up 360.66 points or 2.06% at 17,832.33. The Hang Seng China Enterprises index rose 1.93% to 6,371.78.

The Hang Seng Tech Index gained 2.7%. The sub-index of the Hang Seng tracking energy shares rose 1%, while the IT sector rose 2.09%, the financial sector ended 1.97% higher and the property sector rose 2.95%. Around the region, MSCI's Asia ex-Japan stock index was firmer by 1.26%, while Japan's Nikkei index closed up 0.94%. The yuan was quoted at 7.2699 per U.S. dollar at 08:42 GMT, 0.08% firmer than the previous close of 7.276.