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A ban on short selling in China has been lifted, and stocks are under pressure

Photo by Kevin Frayer/Getty Images

Short selling in China’s stock market is back.

According to a report from Reuters, citing Chinese state-run media, 35 domestic brokerages have been granted approval to resume the practice that was banned in the midst of China’s stock market rout in August last year.

It is simply the sale of a security not owned by an investor, done in the belief that the price will fall enabling the short seller to buy the stock back at a lower level for profit.

Whether due to that news or other factors, Chinese stocks have opened sharply lower on Thursday.

The benchmark Shanghai Composite is currently down by 1.23%, matching similar declines in other mainland indices.

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