Liao said the limited effect might also be due to the lack of motivation among institutional and retail investors to do short selling given the current low valuations of blue-chip companies.

Analysts estimated that the launch of margin trading and short selling was likely to inject a total of 90 billion yuan into the A-share market in its initial stage. The first batch of six brokerages' total funding in the business will likely reach between 40 billion and 60 billion yuan.

"I think the impact is more of a psychological one than a real one," Liao said. "The market's calm response was in fact within expectations as the positive impact was already factored into previous trading."

But he noted that the new business would, in the long run, help improve the profitability of big securities firms backed by a strong capital base as the brokerage business for margin trading and short selling will account for a large chunk of their revenues.

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