Stocks in Shanghai reversed gains after regulators on Wednesday tightened margin requirements in a surprise move to cool a red-hot share market that saw turnover and leverage bets hitting records.

In Hong Kong, the benchmark Hang Seng Index ended up 151 points, or 0.56 percent, at 26,999 while the China enterprises index was 30 points, or 0.32 percent, up at 9,315 and the tech index was 38 points, or 0.66 percent, up at 5,908.

On the mainland, the benchmark Shanghai Composite Index was down 12 points, or 0.31 percent, at 4,126 while the Shenzhen Component Index was up 79 points, or 0.56 percent, at 14,248. The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, was up 27 points, or 0.82 percent, at 3,349.

Bourses in Shanghai, Shenzhen and Beijing said in separate statements they would raise the minimum margin requirement for new borrowings to 100 percent from 80 percent, effective January 19. The measures were approved by China's securities regulator.

"The surprise announcement definitely impacts market sentiment," said Yang Tingwu, vice ‍general manager of asset manager Tongheng Investment.

"It's obvious the market has ⁠been too hot ... There're also signs of froth in some corners of the ‍market."

The Shanghai Composite Index hit a fresh decade high in the morning but reversed gains in afternoon trade after the announcement.

The regulatory move came after China's onshore stock turnover hit a record 3.7 trillion yuan on Tuesday, while ‌outstanding margin financing reached 2.6 trillion yuan, also a record.

In another sign of growing speculative trading, nearly 3 percent ‍of total Chinese shares changed hands on ‌Tuesday, the highest level since late ‌2024.

"It's ‌a good thing to step on the brakes as many hotly chased concept stocks are not supported by fundamentals," said Wang Zhuo, partner of Shanghai Zhuozhu Investment.

"The economy has not ⁠improved, so this liquidity-driven speculative fever will end up burning small investors."

Over the past weeks, trading has been hectic in certain sectors including artificial intelligence, aerospace and robotics, triggering risk warnings from listed companies.

In Wednesday's statements, the exchanges said ‌that raising the margin requirements is a "counter-cyclical" measure ‍aimed at "reducing leverage levels, protecting investors and promoting long-term healthy development of the market."

It's a reversal of measures taken in August 2023 that relaxed margin requirements to reinvigorate the market.

Xu Jie, fund manager at Yuanzi Investment Management (Shanghai), said Wednesday's move is "relatively mild".

"It reflects regulators' desire to ‌cool the rapidly rising market and ⁠avoid overheating." (Reuters/Xinhua)