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Ending the one-way trade in the capital market, the China Securities Regulatory Commission has approved of stock index futures, margin trading and short selling -- new tools that would protect investors against losses and also help them to profit from any declines.

Quoting Zhang Qi, an analyst with Haitong Securities, the China Daily [12]says the move would be positive for blue-chips and heavyweight stocks as the contract would be initially based on China's CSI 300 Index that tracks the 300 biggest shares traded in Shanghai and Shenzhen.

"Index futures are expected to bolster the market value of blue-chips," he told the newspaper.

The Daily notes that analysts expect the new tools to improve liquidity by attracting more capital into the equity market as the government plans to cut back bank lending to 7.5 trillion yuan ($1.1 trillion) in 2010 from last year's 9.21 trillion yuan.

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