**I. Background**

On October 9, 2025, multiple brokerages including Orient Securities uniformly adjusted the margin trading collateral rates of nine A-share stocks, including Semiconductor Manufacturing International Corporation (SMIC), Biwin Storage, and Luqiao Information, to zero. Following this announcement, SMIC and Luqiao Information both experienced significant drops.

According to the "Implementation Rules for Margin Trading" revised by the Shanghai and Shenzhen Stock Exchanges in 2023, A-share stocks with static price-to-earnings ratios above 300 times or negative ratios have their margin trading collateral rates set to zero. As of the market close on September 30, SMIC's static P/E ratio just exceeded 300 times.

**Explanation of Zero Collateral Rate:**

1. A zero collateral rate means the collateral ratio is 0, but this doesn't prohibit financing - investors with margin deposits can still obtain financing.

2. From the maintenance collateral formula perspective: Maintenance Collateral Ratio = (Cash + Market Value of Securities in Credit Account) ÷ (Financing Purchase Amount + Short Sale Securities Quantity × Market Price + Interest and Fees). Therefore, it doesn't affect investors' maintenance collateral ratios.

3. In terms of direct impact, after the collateral rate drops to zero, SMIC can no longer serve as collateral, affecting available margin. For example, if an investor previously held 1 million yuan worth of SMIC shares, they could obtain 700,000 yuan in available margin at a 0.7 collateral rate, but this 700,000 yuan is no longer available, impacting refinancing capacity.

4. After the collateral rate returns to zero, it can be restored once the P/E ratio normalizes, with specific timing determined by individual brokerages.

**II. Impact**

Since SMIC is the largest market capitalization stock in the semiconductor sector and holds significant weight in semiconductor-related indices, its position is crucial and the impact cannot be underestimated. We identify three main implications:

1. **Management's intention to cool tech stocks**, creating short-term headwinds for technology stocks, particularly semiconductors, making near-term corrections more likely. The coordinated notifications from multiple brokerages clearly represent regulatory guidance, sending a strong cooling signal. Management's cooling intention stems from the massive recent gains in semiconductors - the STAR Chip Index rose approximately 35% in the past month, 75% over three months, 80% year-to-date, and as much as 215% since September 24 of last year. Such doubling within just one year appears to management as a "mad bull" rather than "slow bull" trajectory, hence the obvious cooling intent.

2. **Potential fund rotation toward dividend blue chips** as tech stocks receive cooling signals. Year-to-date, "boomer stocks" led by liquor have been controversial due to contrarian declines. However, liquor, banking, and other traditional sectors essentially belong to dividend and blue-chip categories. A healthy bull market or sustained slow bull cannot exclude participation from these traditional sectors. With management signaling tech stock cooling, previously sold-off traditional consumption and financial sectors may gradually reverse their downtrend.

3. **Tech stocks' "mad bull" trajectory may gradually moderate**. This cooling doesn't represent the end of the tech rally but aims for longer-term sustainability. The margin trading collateral rate serves as a regulatory tool that can be both zeroed and restored, so after a period of tech stock adjustment, collateral rates are expected to recover, potentially stimulating tech stock rallies again.

**Conclusion**

SMIC's zero margin trading collateral rate merely represents a management cooling signal rather than suppression. Short-term tech stock adjustments don't alter the long-term bull market trajectory. From an investment perspective, investors with substantial profits (30%+ gains) in tech themes may consider partial profit-taking. Those who bought at high levels should wait patiently, while those without tech positions can consider gradual accumulation on dips. Additionally, appropriate allocation to dividend themes is advisable rather than concentrating solely on technology themes.