Nine stocks face "deleveraging" measures.

On October 9th, multiple securities firms including Eastmoney Securities, Guorong Securities, and Oriental Securities confirmed they would uniformly adjust the margin trading collateral rates of nine A-share stocks to zero, including Semiconductor Manufacturing International Corporation (SMIC), Powerway Advanced Materials, and Luqiao Information. Following the announcement of these adjustments, SMIC, Luqiao Information, and others experienced notable declines.

Regarding the reasons for these adjustments, the explanations from various brokerages were highly consistent: this action follows the relevant rules of exchange margin trading, whereby if a stock's static price-to-earnings ratio exceeds 300 times or is negative, the margin trading collateral rate is adjusted to zero.

It's worth noting that this individual stock collateral rate adjustment is part of the brokerages' normal dynamic risk control measures. Once the relevant stocks' static P/E ratios fall below 300, the collateral rates will be correspondingly restored.

Multiple Brokerages Take Action: Nine Stocks' Collateral Rates Reset to Zero

After market close on October 9th, news emerged that Eastmoney Securities had notified clients via SMS that the collateral rate for SMIC held in their credit accounts would be adjusted from 0.7 to 0, and Powerway Advanced Materials' collateral rate would be adjusted from 0.5 to 0.

Besides Eastmoney Securities, Oriental Securities and Guorong Securities also published similar announcements on their official websites on September 30th. Due to abnormal static P/E ratios, they adjusted the collateral rates of SMIC, Powerway Advanced Materials, Tianma Technology, Ruisheng Intelligent Technology, Magnsoft, Honghui Fruit, Yongding Shares, Luqiao Information, and Harbin Air Conditioning to 0, with these adjustments taking effect officially on October 9th.

On October 9th, after the disclosure of the above news, SMIC's H-shares closed at HK$83.5 per share, down 6.7%, while SMIC's A-shares closed at 138.91 yuan per share, down 0.87%. Luqiao Information closed at 38.01 yuan per share, down 17.24%. Honghui Fruit closed at 9.12 yuan per share, down 2.46%.

The margin trading collateral rate, simply put, is the "discount" applied to the market value of stocks when investors use them as collateral for financing when calculating margin requirements. The higher the ratio, the more funds can be borrowed; an adjustment to 0 means the stock temporarily loses its function as collateral for financing.

Regarding the reasons for this adjustment, Guorong Securities provided a clear explanation: according to the "Shanghai Stock Exchange Margin Trading Implementation Rules," "Shenzhen Stock Exchange Margin Trading Implementation Rules," and "Beijing Stock Exchange Margin Trading Implementation Rules," A-share stocks with static P/E ratios above 300 times or negative, as well as warrants, have a collateral rate of 0%.

This core risk control rule stems from the "Shanghai/Shenzhen/Beijing Stock Exchange Margin Trading Implementation Rules" implemented since 2016 and continues to be used today. Although markets constantly change, this provision remains effective as one of the cornerstones of risk control in margin trading business, aimed at preventing leverage risks that may arise from price volatility of highly valued stocks.

This adjustment will directly compress investors' space for leveraged operations using these stocks. Oriental Securities specifically reminded in its announcement: "Adjustments to the collateral rates of securities eligible for margin will cause changes in available margin balances. Investors are advised to pay attention to related risks." If investors hold large amounts of these stocks in their credit accounts, their total margin will decrease, potentially facing pressure to add more margin or reduce liabilities.

Normal Dynamic Risk Control: Can Be Restored When P/E Ratios Fall

The information disclosed by brokerages shows that besides most stocks with zero collateral rates having dynamic P/E ratios reaching 300 times, some listed company stocks have P/E ratios as high as 947 times.

On September 30th, Guorong Securities detailed the situation of nine stocks hitting the P/E ratio "red line." The static P/E ratios of SMIC, Powerway Advanced Materials, Tianma Technology, Ruisheng Intelligent Technology, Magnsoft, Honghui Fruit, Yongding Shares, Luqiao Information, and Harbin Air Conditioning were all above 300 times, with Luqiao Information having the highest static P/E ratio of 947 times.

The highly market-watched SMIC and Powerway Advanced Materials had static P/E ratios of 303 times and 301 times respectively, just crossing the 300-times threshold. The brokerage's disclosed forward P/E (FY1) were 214 and 114 respectively, significantly lower than their static P/E ratios.

It's worth mentioning that the announcement also shows this adjustment is part of the brokerages' dynamic risk control measures.

Guorong Securities disclosed that when stocks' static P/E ratios fall below 300 times, their collateral rates can be restored. For example, Founder Cyber and JKCYBER have had their collateral rates restored from 0 to 0.5 and 0.3 respectively due to P/E ratios falling below 300. Oriental Securities also simultaneously announced that Founder Cyber and JKCYBER's collateral rates have been restored from 0 to 0.65 and 0.3 respectively.