China’s stock exchanges have introduced daily restrictions on net share sales by hedge funds and large retail investors, as Beijing intensifies its efforts to stabilize the market amid growing trade tensions with the United States, sources confirmed on Friday.
Sources close to the matter revealed that a soft limit has been set at 50 million yuan ($6.83 million) on daily net sales by individual hedge funds and major retail investors. Brokerages have been instructed to issue verbal warnings to investors who exceed this threshold, with the risk of trading account suspension for those who fail to comply.
These measures, which are not publicly acknowledged by the exchanges, come as China struggles to counter the impact of U.S. tariffs on its economy. Beijing’s retaliatory measures, including raising tariffs on U.S. imports to 125%, are part of its response to escalating trade tensions.
In recent weeks, China has rolled out several initiatives to stabilize its stock markets, which have suffered from the trade war. The government-backed Central Huijin has pledged to increase stock holdings, and many Chinese companies are buying back shares. Leading brokerages have also committed to supporting the market.
One source from a brokerage explained, “Such a restriction is understandable, as you don’t want to act against state will.”
The directive also highlights that the 50 million yuan daily sales limit could be lowered further if the market experiences another downturn. The stock exchanges in Shanghai and Shenzhen declined to comment on the issue.
Despite early declines, Chinese and Hong Kong stocks managed to recover on Friday, reducing the week’s losses. Meanwhile, U.S. President Donald Trump has paused tariff hikes for most countries, but has continued to target China with stricter duties.
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