A-Share Margin Financing Falls Over RMB 400 Billion in a Month as Tech Leverage Retreats
A-share margin financing balances dropped by RMB 407.9 billion in July, the second-largest monthly decline on record, after peaking at RMB 3.01 trillion in late June. The balance fell to RMB 2.5891 trillion by July 31, with the margin-to-float ratio at 2.69%. Semiconductor and communication equipment led sell-offs, with net repayments exceeding RMB 69.5 billion and RMB 45.4 billion respectively. The tech sector saw over RMB 150 billion in leverage unwind, largely concentrated in previously crowded trades. Unlike the 2015 deleveraging, this adjustment was driven by proactive risk reduction without systemic forced liquidation.
As of July 31, the A-share margin financing balance stood at RMB 2.5891 trillion, down about RMB 420 billion from the historical high of RMB 3.01 trillion on June 25. In July alone, margin financing balances fell by RMB 407.9 billion, a month-on-month decline of 13.61%. The margin balance as a percentage of float market capitalization was 2.69%, returning to levels seen near the end of the first quarter. This shift indicates that leveraged funds that had flowed in rapidly since the second quarter completed a concentrated retreat in July.
In July, net repayments of margin financing in technology sub-sectors including semiconductors, communication equipment, components, consumer electronics, batteries, automation equipment, and optoelectronics each exceeded RMB 10 billion. Semiconductor companies saw net margin repayments of RMB 69.544 billion in the month, while communication equipment recorded RMB 45.375 billion in net repayments. The broader technology sector's margin balance contracted by more than RMB 150 billion cumulatively. Hardware equipment saw net margin selling of RMB 134.262 billion, and semiconductors recorded RMB 69.168 billion in net selling, with fund outflows highly concentrated in the previously crowded tech trades.
Storage chip maker Demingli saw its margin balance fall from a historical peak of RMB 12.96 billion on June 30 to RMB 5.678 billion on July 30, with over RMB 7.2 billion in leveraged funds exiting within a month. On July 31, the stock saw net margin buying of RMB 957 million, a single-day high for July, indicating localized fund inflows. Xi'an Yicai-U, a STAR Market company, saw its share price fall 59.19% in July; over the last five trading days of July, it recorded net margin inflows on four days, with its margin balance rising from RMB 395 million on July 24 to RMB 518 million on July 31.
In June 2015, margin financing balances fell by RMB 828.6 billion over 14 consecutive trading days from a peak of RMB 2.27 trillion, a decline of about 36.6%, accompanied by the cleanup of off-market leverage and a full-market forced liquidation feedback loop. The July 2026 adjustment was concentrated in the technology sector, with funds giving back net inflows since April, and no full-market forced liquidation chain occurred; risk release mainly came from proactive deleveraging. The July decline of RMB 407.9 billion in margin balances was the second-largest monthly drop in A-share history, second only to the RMB 709.3 billion decline in July 2015.