Chinese stocks are opening flat to marginally higher - still lower from Friday's close - despite the government unleashing yet more 'measures' in the name of stability. Having banned 5 accounts - reportedly including Fed-favorite Citadel - China is blaming excess market volatility on short-term short-sellers and has put in place curbs on short-selling that force traders to hold for at least one day. On the bright side, margin traders reduced exposure for the seventh day in a row, reducing outstanding balances to 5-month lows.. which leaves the median China stock trading at a remarkable 61x reported earnings (compared with 12x in Hong Kong).

As Bloomberg details,

Investors who borrow shares must now wait one day to pay back the loans, according to statements from the Shanghai and Shenzhen stock exchanges issued after the close of trading on Monday. This prevents investors from selling and buying back stocks on the same day, a practice that may “increase abnormal fluctuations in stock prices and affect market stability,” the Shenzhen exchange said.

The short-selling curbs are the latest measures the government is taking to prop up share prices and prevent market manipulation after an almost $4 trillion selloff. Regulators are probing “malicious” short selling and have examined the futures trading accounts of foreign investors. They’ve also banned stock sales by major shareholders, suspended initial public offerings and compelled state-run institutions to support the market with equity purchases.

As Reuters adds,

"This is apparently aimed at increasing the cost of shorting and easing selling pressure on the market," said Samuel Chien, a partner of Shanghai-based hedge fund manager BoomTrend Investment Management Co.

He added, though, that short-selling was already difficult, referring to other efforts to limit the practice. These include a move by Chinese brokerages to limit short-selling business.

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But for now it is having only modest impact...

The more measures they apply, the higher the price of pork goes and the more squeezed by inflationary pressures - no matter how bad the economy - the PBOC is to not cut RRR.

In other words, a 21% surge in pork prices - a major component of China CPI - forces the PBOC toapply piecemeal measures and not apply broad based  cuts to stimulate the economy. So while some talking heads pray for more bad data in China, they are missing the crucial panic factor - soaring food prices will mean more social unrest than plunging stock prices.

Charts: Bloomberg