Short selling mechanism has positive significance and function to the stock market, but its negative effect is also obvious. Especially for an emerging market with a short history, imperfect legal system, loopholes in rules and extremely asymmetric information.

The essence of China stock market is to make money for non-tradable shareholders, not to allocate resources. This essence is determined by the basic contradiction of China stock market-the contradiction between tradable shares and non-tradable shares, or the contradiction between tradable shareholders and non-tradable shareholders. It is this basic contradiction that determines that the China stock market cannot design a short-selling mechanism.

Extended data:

Generally speaking, shorting individual stocks is very obvious and will be resisted by listed companies and regulators, so it is more hidden than shorting stock index futures. At present, domestic market indexes are not allowed to short, so short-selling institutions will target China indexes in some overseas markets, such as Xinhua FTSE China 25 stock index futures of CME.

At present, the domestic stock index has been loosened for the third time, and the handling fee has been lowered, but there are still 50 trading restrictions. The loosening of stock index futures is also a big plus for domestic investment institutions. Because in the stock market, the risk of simply holding long positions is great. With the entry of public financing funds into the market, it is more necessary to have a tool to hedge risks.

Baidu encyclopedia-shorting the stock market