Analysis-Record $322 billion in China loans for stock bets feeds volatility and prompts caution
By Samuel Shen, Rae Wee and Qiaoyi Li
SINGAPORE/SHANGHAI (Reuters) -China’s investors borrowed a record $322 billion to buy stocks this year, but sharp corrections this week and heightened regulatory scrutiny to cool overheated markets are now making them jittery about the leveraged bets.
While risks for China’s broader financial system have been elevated for months due to deflation in the economy and a persistent property debt crisis, the stock investors’ recent actions could add more pressure.
Outstanding margin financing in China, a key gauge of sentiment and leverage level, hit a record 2.3 trillion yuan ($321.55 billion) this week. And some speculators are diverting consumer loans to stock trading.
Those helped…
