Concerns over short selling weigh heavily on stock market

Chinese stocks ended lower on the first day of trading after the week-long Lunar New Year holiday amid concerns that soon-to-be-launched short selling in Shanghai will weigh on the bullish market sentiment.

Starting next week, overseas investors will be allowed to engage in short selling on a total of 414 stocks listed in Shanghai through the Shanghai-Hong Kong Stock Connect - a trading arrangement that allows mainland and Hong Kong investors to trade shares in each other's markets.

The introduction of short selling is being seen as an attempt by the securities regulator to lure more sophisticated international investors into the mainland's markets by offering them more hedging tools.