Risks associated with margin trading that allow investors to borrow money for stockpurchases are well under control, the capital market regulator said on Friday, soothinginvestors' nerves after the A-share market suffered its biggest monthly loss in nearly eightyears.

An investor checks stock prices at a securities brokerage in Jiujiang, Jiangxi province. [Photo/China Daily]

The benchmark Shanghai Composite Index gained 3.09 percent to close at 2,737.6 points onFriday. Despite the rebound, the index suffered a monthly loss of 22.65 percent, the biggestsince 2008.

Zhang Xiaojun, spokesman for the China Securities Regulatory Commission told a newsconference that all indicators for the margin trading business have shown that risks are undercontrol.

Total outstanding loans for margin trading stood at 914 billion yuan ($139 billion) as ofThursday. Risky loans with collateral below the warning level only accounts for 1.55 percentof the total loans, according to data from the CSRC.

Risks in the stock collateral business of securities brokerages have also been well containedwith risky loans worth about 20 billion yuan.

Meanwhile, major shareholders of listed companies sold shares worth about 7.47 billion yuanbetween January 9 and January 28, only accounting for 20 percent of the total share valuesold during the same period of last year.

"The value of share sales by major shareholders was substantially lower than that of thesame period last year. That has to do with the new restrictions imposed by the regulator,"Zhang said.

Analysts said that Friday's market rebound could indicate better sentiment as the A-sharemarket has quickly absorbed the negative impact of the uncertainties of the monetary policyand the instability of the renminbi.

On Friday, the Shenzhen Component Index surged 3.7 percent while the startup indexChiNext that tracks high-tech and innovative companies soared by 4.6 percent.

The Bank of Japan on Friday unexpectedly adopted a negative interest rate to support theJapanese economy. The US Federal Reserve also stated at the latest interest rate meetingthat it would keep the rate unchanged.

"The global monetary environment has been improving, which could support the A-sharemarket to consolidate and rebound," said Xue Hexiang, a strategist at Huatai Securities Co.

The CSRC said declining profitability will not impede companies from issuing new shares aslong as they fully disclose the risks to prospective investors.

"The regulator will no longer endorse the value and investment returns for IPOs under thenew registration-based system," said Zhang, the CSRC spokesman.

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