Chinese stocks closed down on Thursday, hit by a slump in brokerages after local media reported that the regulator had set up a team to check brokers’ margin business.

The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 1.2 per cent, to 3,183.01, while the Shanghai Composite Index lost 0.5 per cent, to 2,925.74 points.

Sina Financial, a domestic Internet media firm, reported on Thursday that the China Securities Regulatory Commission (CSRC) had set up a special team to investigate brokerages’ margin business and some of them could be punished.

Market liquidity

Investors were also worried over market liquidity after CSRC approved ahead of schedule 12 IPOs late on Wednesday, a move which could cool a blistering rally in the country’s stock markets which has seen the benchmark CSI index surge more than 30 per cent in two weeks.

Western Securities Co dived to its 10 per cent daily limit, with 14 brokerage shares sliding over 5 per cent, including Haitong Securities Co, Founder Securities Co and Guohai Securities Co.

Among the most active stocks in Shanghai were Baotou Steel, up 6.0 per cent at 4.45 yuan; China Shipbuilding, down 0.8 per cent at 8.39 yuan and Hainan Airline, up 9.9 per cent at 3.44 yuan.

In Shenzhen, BOE Technology, down 1.0 per cent at 3.11 yuan; Xingrong Invest, up 10.0 per cent at 7.28 yuan and Changjiang Securities Co, down 3.3 percent ato 14.43 yuan, were among the most actively traded.

Foreign investment flowing into Shanghai from Hong Kong through the mutual market access pilot programme took up 1.07 billion yuan of the 13 billion yuan daily quota.

Total volume of A shares traded in Shanghai was 48.2 billion shares, while Shenzhen volume was 23.5 billion shares.

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