Shadow Bank Crackdown Seen Needed to Tame Chinese Stocks
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China’s clampdown on borrowing for purchases of the world’s most-volatile equities has missed shadow-banking activities that allow investors to take even greater risks.
Investors have ramped up bets on rallying shares by borrowing through structures known as “umbrella trusts,” which allow for more leverage than brokerage financing. Goldman Sachs Group Inc. estimated up to 500 billion yuan ($80 billion) has entered stocks through wealth-management products. Use Trust data show 43.1 billion yuan of securities investment trusts were set up last quarter, 92 percent up from a year ago.