Margin calls fuel China's dramatic stock market collapse

At the centre of this dramatic slide are individual investors borrowing from a broker to buy securities

What goes up, can also come down, as the old adage and the modern-day investor warning go. And that is precisely what the tens of millions of people who hold shares in China have been discovering.

Chinese stocks had doubled between last November and mid-June, to the delight of a fast-growing army of retail investors. In echoes of the dotcom bubble in the US, much of the speculation, fuelled by borrowing, has been on technology stocks. But now shares across all sectors are tumbling. After another punishing week, and despite a surprise move last week by the central bank to cut interest rates, shares are now down nearly 30% from their peak less than four weeks ago.

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