China's Gray Market in Margin Lending Is Probably Massive
Umbrella trusts and web-based financing. Oh my.
Investors look through stock information at a trading hall in a securities firm in Shenyang, northeast China's Liaoning Province.
Photographer: Pan Yulong/XinhuaThis article is for subscribers only.
Chinese stocks have been on a terrible run. Many say the dramatic sell-off has been fueled by the unwinding of margin loans that once helped propel Chinese stocks to dramatic heights in the first place.
In recent months, the steady flow of margin loans had made Chinese regulators nervous. The amount of margin financing China's brokerages are allowed to extend has since been capped at about two to three times investors' initial capital.