In a sign of growing investor confidence, the outstanding balance of securities margin financing in China’s A-share market climbed to 2.3 trillion yuan ( US$322 billion ) in the second week of September, the highest in the past nine years. Analysts, however, are quick to point out that the margin debt ratio is still in line with the median since 2016.

In the first six months of 2025, investors traded 162.7 trillion yuan worth of A-shares, a 61% jump from the same period last year and the highest half-year figure in recent years. “There are signs of households mobilizing their idle savings to the asset market, improving market liquidity. This can be seen in the narrowing of the negative M1-M2 growth gap to its smallest since May 2021,” says Chi Lo, senior market strategist, Asia-Pacific, at BNP Paribas Asset Management. “It indicates a shift of funds from M2 ( fixed deposits ) to M1 ( current accounts ) and then to the stock market.”

The recovery in market confidence has boosted the demand for securities margin financing, with the outstanding balance in the first half of 2025 rising 25% year-on-year to 1.85 trillion yuan. Then the 2-trillion-yuan threshold was crossed in August – the first breach since July 2015 – and balances added another 300 billion yuan in the following six weeks, according to exchange and market data.

Analysts say the surge in margin trading is more than a speculative echo. With turnover running at twice last year’s pace and global investors such as Goldman Sachs maintaining an overweight position in Chinese equities, the expansion of margin debt is being framed as a vote of confidence in a market that has lagged behind its global peers for three straight years. Goldman estimates roughly an 8% upside for A‑shares and about 3% for H‑shares over the next 12 months.

Brokerages are rushing to meet the demand, with players like Industrial Securities and Chinalin Securities lifting internal caps on credit exposure this quarter, while some securities firms have reported “double-digit” growth in interest income from margin financing in H1 2025.

Despite the eye-catching level of leverage trading in the market, margin debt represents just around 2.5% of A-share free-float capitalization, in line with the median since 2016, indicating that there’s room for this activity to grow further and that most investors remain cautious, according to brokerage firms.

The margin debt ratio of about 70 stocks has surpassed 10% and nine sectors have margin balances above 100 billion yuan each, covering electronics, power equipment, non-bank financials, computing, healthcare, machinery, autos, metals, and telecommunications.