China’s brokers have raised more capital this year than in the past three combined — and more than half the $14bn proceeds are being ploughed straight back into financing the equity boom that enabled them to tap the markets in the first place.

The frenzied rallies in Shanghai and Shenzhen this year have been largely fuelled by margin lending, where loans to invest in the market are secured against the stocks purchased.

Margin-financed long positions in the onshore A-Share market now total Rmb1.9tn, or $307bn — up 84 per cent this year, and four times the level this time last year, according to Macquarie analysts. The sharp rise has stoked fears it could reverse almost as quickly: if the value of margin-financed portfolios were to fall, lenders would demand more collateral or reduce the size of loans, which could trigger forced selling.