Multiple securities firms adjust! Why is the stock margin ratio reduced to 0 for a wave of stocks?

The margin conversion rate was suddenly adjusted to 0, attracting market attention to the changes in some individual stocks today. On October 9th, investors received a notification from East Money Information Securities via SMS, informing them that the margin conversion rate of Semiconductor Manufacturing International Corporation (688981.SH) in the credit account had been adjusted from 0.7 to 0.00, and Biwin Storage Technology (688525.SH) had its margin conversion rate adjusted from 0.5 to 0.00. A reporter from Caixin contacted East Money Information Securities customer service, who confirmed the adjustment and explained that according to the regulations of the two exchanges, when the static price-to-earnings ratio of a stock exceeds 300 times or is negative, the margin trading conversion rate must be adjusted to 0. Semiconductor Manufacturing International Corporation and Biwin Storage Technology both currently have static price-to-earnings ratios over 300 times, so this was a normal adjustment made in accordance with the rules. This regulation has been in effect since 2016 and continues to be enforced. Although there have been some adjustments to certain stocks in July 2025, the core rules remain the same, aiming to strengthen risk control and ensure the smooth operation of margin trading business. The adjustment of the stock margin conversion rate to 0 is not only done by a single brokerage firm but is a unified action within the industry. At present, the number of stocks with a conversion rate of 0 in the market has exceeded one thousand. In addition, there was a collective adjustment in the semiconductor sector in the afternoon, which was the result of multiple factors. Looking at the overall performance of the sector, the semiconductor sector has accumulated a 57.19% increase this year, with a range amplitude of 72.04%. Guosen, Guotai Haitong, and other brokerage firms simultaneously adjusted East Money Information Securities is not the first brokerage to adjust the margin conversion rate of the two stocks mentioned. According to the regulations of the exchange, several brokerage firms recently adjusted the margin conversion rates of some listed companies' stocks, but it did not attract as much attention as today. Guosen: On September 30th, Guosen issued two announcements regarding the adjustment of deposit securities, including Semiconductor Manufacturing International Corporation and Biwin Storage Technology, among others, totaling 10 listed companies with a conversion rate adjusted to 0. The adjustment for the two mentioned stocks will be effective from the next trading day. In addition, adjustments were also made for Shenzhen Manst Technology, Jiangsu Etern, Harbin Air Conditioning, Great-Sun Foods, Wuhu Fuchun Dye and Weave, and XMRBI, with Semiconductor Manufacturing International Corporation's conversion rate adjusted from 0.5 to 0.00, and Biwin Storage Technology's conversion rate adjusted from 0.6 to 0.00. Guotai Haitong and The Pacific Securities: On October 9th, both brokerage firms simultaneously announced that the conversion rates of 9 listed company stocks would be adjusted to 0, including Semiconductor Manufacturing International Corporation and Biwin Storage Technology. The remaining 7 companies are Shenzhen Manst Technology, Jiangsu Etern, Harbin Air Conditioning, Great-Sun Foods, Fujian Tianma Science And Technology Group, Zhejiang Risun Intelligent Technology, and XMRBI. Regarding the adjustment of the conversion rate, Guotai Haitong mentioned in the announcement that the conversion rate of some securities was adjusted due to long-term suspensions, long-term suspension resumptions, or special treatments; and in accordance with the exchange's requirements to adjust the conversion rate of deposit securities. Semiconductor Manufacturing International Corporation fluctuated by over 11% in a single day On the day of the conversion rate adjustment, the semiconductor chip sector experienced a significant downturn in the afternoon, affecting the performance of related stocks and indices. Semiconductor Manufacturing International Corporation closed down 0.87%, after rising over 9% in the morning, with a range of 11.42% and a turnover of 24.25 billion yuan. Biwin Storage Technology, which initially rose by 8.51%, narrowed its gains to 2.34% by the close. Hua Hong Semiconductor plummeted, while Shanghai Zhangjiang Hi-Tech Park Development hit its limit down. Nanjing Wavelength Opto-Electronic Science & Technology, Hunan Kaimeite Gases, and Giantec Semiconductor Corporation also experienced significant declines. The ChiNext 50 index was affected by the volatility, reaching a maximum increase of 6.19% during the day, but saw a decline in the afternoon, with the closing gain narrowing to 2.93%. Regarding the reasons for the stock price fluctuations, some believe it is related to the adjustment of the margin conversion rate to 0, while others view it as a normal market movement given the previous significant gains in the semiconductor sector. Taking Semiconductor Manufacturing International Corporation as an example, as of October 9th, since its inception on August 22nd, the stock price had accumulated a 52.56% increase, with a range amplitude of up to 66.53% and a turnover rate of 161.75%. According to the regulations of the exchange, the adjustment of the conversion rate is a normal operation Based on the announcements from various brokerage firms, the adjustment of the conversion rates of multiple stocks this time is not a temporary measure but a normal operation conducted in accordance with the rules of the exchange. On December 2, 2016, the Shanghai and Shenzhen stock exchanges announced that, with approval from the China Securities Regulatory Commission, they had revised the "Detailed Rules for Margin Trading and Securities Lending." Among other things, the requirement for the conversion rate of deposit securities was adjusted, with stocks with static price-to-earnings ratios above 300 times or negative having their conversion rates lowered to 0%. The notification from the Shenzhen Stock Exchange stated that stocks under risk warning, suspended from trading, or in the delisting process, A-shares with static price-to-earnings ratios above 300, and warrants would have a 0% conversion rate. Industry professionals stated that the core logic behind this rule is to control risks, allowing leverage for stocks with lower valuations while eliminating leverage for those with higher valuations to reduce business risks. As of the close on October 9th, the static price-to-earnings ratio of Semiconductor Manufacturing International Corporation was 300.5, with a closing price of 138.91 yuan, reaching a high of 153 yuan during trading, resulting in a price-to-earnings ratio of 330.95. Biwin Storage Technology had a closing price-to-earnings ratio of 309, with a closing price of 106.74 yuan, reaching a high of 113.18 yuan, resulting in a high price-to-earnings ratio of 323.37. The static price-to-earnings ratios of these two stocks during trading were significantly higher than the specified standards. Some brokerage professionals stated that currently in the market, there are over a thousand stocks whose conversion rates have been adjusted to 0 due to not meeting the requirements of the static price-to-earnings ratio, and the related rules have been in place for many years. Guotai Haitong's official website provides a stock conversion rate query window, showing that there are not a few stocks with a conversion rate of 0. Based on sampled data, each browsing page averages 1 to 2 stocks with a conversion rate of 0, with a total of 781 pages, indicating there may be over a thousand stocks with a conversion rate of 0. This article is reproduced from Caixin with edits by GMTEight, translated by Li Fo.