Asia: Chinese stocks slide following margin lending crackdown

Stocks in Asia were mixed on Monday with Chinese shares sliding the most in seven years, though Tokyo was boosted by consumer confidence data.

Shanghai's main index was down 7.7% closing at 3,116.35, the biggest decline since June 2008. Hong Kong's Hang Seng Index was also lower by 1.51%.

The China Securities Regulatory Commission on Friday announced it would be adopting measures against a dozen brokerages for violations of margin-trading rules.

Three of the country’s top brokers were stopped from using margin trading accounts and other risky investment practices.

CMC Markets analyst Jasper Lawler said: "Chinese markets have been getting pretty overheated since the announcement of the cut in interest rates led to rally in large cap financial stocks.

"The Chinese rally has been particularly striking in comparison with the relatively choppy performance of US and European stocks in the latter half of 2014," he continued.

Xie Weiyu, a strategist at Shenyin & Wanguo Securities, told Bloomberg: "The jump in the outstanding values of margin trading in the short term does mean the risk is building up."

Furthermore, house prices index dropped in December to -4.3% from -3.7% the month before.

On the bright side, Japan's Nikkei 225 was up 0.89%. Japanese stocks enjoyed an improvement in consumer confidence in December to 38.8 from 37.7 in the previous month.

Industrial production also improved slightly in November, falling less than expected. Year-on-year, industrial production declined 3.7% from -0.8% the month before, while forecasts expected a decline of 3.8%.