THE margin financing that helped fuel last year’s stock market boom in China — and exacerbated its subsequent tumble — climbed the most since November after policymakers loosened controls on such lending.

    Outstanding margin trading rose 2.2 percent, the most since Nov. 9, to 863.3 billion yuan (US$133 billion) Monday. The jump, on a day when the Shanghai Composite Index rose above 3,000 for the first time in two months, came after a government agency said it will resume short-dated margin loans to brokerages at lower interest rates.

    Speculation last week that officials were relaxing margin finance restrictions helped revive trading volume and sent a gauge of small-cap shares in Shenzhen to its biggest weekly gain on record.

    The amount of shares purchased on margin has plunged more than 60 percent from last year’s pre-rout peak as traders fled Chinese equities and regulators made it harder for investors to access loans.

    China Securities Finance Corp. said Friday it would restart offering loans to securities firms for periods ranging from 7 days to 182 days. The State-backed agency, which provides funding to brokerages for margin trading, will cut interest rates on the debt to as low as 3 percent, it said.

    The reduced rates shouldn’t be seen as regulators encouraging leverage in the stock market, China Securities Journal reported on its front page yesterday, without citing anyone. The rate cut was a normal adjustment based on the money market rate trend, as well as changes in supply and demand, the paper wrote. (SD-Agencies)