China’s Margin Lending Curbs Open Door to Shadow Banking
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China’s clampdown on margin lending by brokerages risks fueling an upswing in shadow banking as investors look for new ways to leverage their stock bets.
Wealth-management products, known as WMPs, have been used to channel 300 billion yuan ($48 billion) to 500 billion yuan into shares, Goldman Sachs Group Inc. estimated in a Jan. 19 note. Sinolink Securities Co. put the figure at 1.5 trillion yuan, up from 800 billion yuan at the end of June. Outstanding margin loans totaled a record 1.1 trillion yuan at the end of last week, China Securities Finance Corp. data show.