China market surges on short-selling limits

Mainland China's stock market ended sharply higher on Tuesday, 04 August 2015, after two stock exchanges stepped up crackdown on short-selling. The benchmark Shanghai Composite Index ended 133.64 points, or 3.69%, higher at 3756.54 points. The Shenzhen Composite Index, which tracks stocks on China's second exchange, jumped 4.77%, or 97.84 points, to 2150.95 points.

The Shanghai and Shenzhen exchanges said in separate statements on Monday night that new rules, effective immediately, banned traders from borrowing and repaying stocks on the same day - a step that raises risks for short-sellers. Short-selling is a term used to describe a practice of selling shares that are not owned at the time by the seller. Short-selling provides liquidity to operators in exchange for higher risk.

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