On February 10, 2023, the Beijing Stock Exchange announced that the margin trading and short selling (hereinafter referred to as “two-way margin trading”) business would officially kick off on February 13. At that time, securities companies that have obtained the two-way margin trading authorization from the Beijing Stock Exchange will be able to accept investor orders and submit two-way margin trading applications to the Beijing Stock Exchange. On the same day, the Beijing Stock Exchange issued the “Announcement on Matters Relating to the Scope of Stocks Eligible for Margin Trading and Short Selling,” clarifying the criteria for including stocks in the list of eligible securities for two-way margin trading and announcing the first batch of eligible stocks. NORTHLAND was among those selected.

The initial list of margin trading eligible stocks includes a total of 56 stocks, accounting for 30% of the number of stocks listed on the Beijing Stock Exchange. Among these, 49 stocks were included based on the criteria for constituents of the BEI 50 Index, while 7 stocks were included because they met the liquidity screening standards. According to data from Choice, as of the close on February 10, the total market capitalization of the 56 stocks on the initial margin trading eligible list reached 152.705 billion yuan, representing 63% of the entire Beijing Stock Exchange market. On that day, the trading volumes of seven BEI margin trading eligible stocks—NORTHLAND, BETTER, KUNGLONG TECHNOLOGY, SILANE TECHNOLOGY, CLOUDDATA, DEYUAN PHARMACEUTICAL, and LIANCHENG CNC—exceeded 10 million yuan.

The launch of margin trading and short selling is an important step in continuously advancing the institutional development of the Beijing Stock Exchange, refining its trading mechanisms, and enhancing the pricing function of the secondary market. Drawing on the operational experience and practices from the A-share market, many market institutions and experts have pointed out that the margin trading and short selling system can help attract additional capital, boost market confidence, and—through the leverage effect—likely increase market trading activity. At the same time, this system can also enrich investors’ trading strategies, meet their diverse trading needs, facilitate price discovery in the market, and further enhance market liquidity.

NORTHLAND has been included in the first batch of margin trading and short selling eligible stocks on the Beijing Stock Exchange, indicating that the company boasts solid fundamentals, standardized operations, and long-term investment potential. This also signifies the high recognition from regulators and the market regarding its growth prospects and investment value, which will help enhance the company’s overall influence and attract more potential investors and partners. Moreover, the margin trading and short selling mechanism will encourage investors to further explore and focus on the company’s core values. The company will continue to enhance its operational capabilities, accelerate the R&D progress of new drug projects, and assist investors in achieving true value investing.

What is margin trading?

Securities margin trading refers to the practice in which investors provide collateral to a securities firm qualified to offer margin and short-selling services, borrow funds to purchase exchange-listed securities (margin trading), or borrow exchange-listed securities and sell them (short-selling).

Simply put, a margin trading account is like a “credit card” that a securities firm provides to investors who have a certain level of risk tolerance. In a margin transaction, an investor uses cash or securities as collateral to borrow funds from the securities firm for the purpose of purchasing securities, and then repays the principal and interest within an agreed-upon period. In a short-selling transaction, an investor uses cash or securities as collateral to borrow securities from the securities firm and sell them. Within an agreed-upon period, the investor buys back the same quantity and type of securities to return to the broker and pays the corresponding short-selling fee.

What are margin trading and short selling eligible stocks?

Stocks eligible for margin trading and short selling refer to securities that securities companies can lend to investors and that investors can purchase using borrowed funds. After a certain period, the exchange will evaluate and adjust the list of eligible securities, with the aim of promoting the long-term healthy development of margin trading and short selling activities and optimizing the structure of eligible securities.