China’s Equity Market Momentum Grows as Turnover and Margin Loans Hit Record Levels Ahead of 2026

Rising trading volume and surging margin financing in Chinese equity markets signal strong investor appetite, with the SSE Composite and CSI 300 posting significant gains. The trend reflects growing confidence ahead of 2026, particularly in financials, technology, and consumer sectors, while Hong Kong’s stock exchange also shows elevated activity.

Investor enthusiasm in China’s equity markets has intensified, with turnover on the Shanghai Stock Exchange (SSE Composite) averaging 1.4 trillion yuan daily in December 2025—up 38% year-over-year. This surge coincides with margin loan balances climbing to 1.78 trillion yuan by late December, a record high that underscores aggressive risk-taking by retail traders. The CSI 300 index rose 18% during the same period, outperforming broader global benchmarks. The rally is concentrated in cyclical sectors, with financials leading the ascent due to improved credit conditions and government stimulus measures. Technology stocks, particularly semiconductor and EV-related firms, gained 24% over the quarter amid rising domestic demand and export momentum. Consumer sector equities also advanced, fueled by post-pandemic spending recovery and targeted fiscal support programs. Hong Kong’s market, represented by the Hang Seng Index (HKEX), mirrored mainland trends, recording a 25% increase in average daily turnover and a 41% rise in margin lending. Cross-border flows have intensified, with mainland investors boosting holdings in H-shares through the Shenzhen-Hong Kong Stock Connect program, which saw net inflows exceeding 90 billion yuan in December alone. Market participants now view early 2026 as a potential inflection point, driven by policy tailwinds, earnings upgrades, and renewed foreign investor interest. However, analysts caution that heightened leverage and speculative behavior could amplify volatility if sentiment shifts abruptly.