CHINA-ECONOMY: STOCK EXCHANGE CRISIS

 According to latest revelations, China's big state-owned banks have lent a combined Rmb1.3tn ($209bn) in recent weeks to the China Securities Finance Corp, for lending on to brokerages to finance their investment in shares and to purchase mutual funds directly. Caijing, a well-known Chinese financial magazine, reported on Friday that the country's sixth-largest lender by assets, China Merchants Bank, provided the largest single loan, at Rmb186bn.


The magazine reported on its website that China's five largest banks namely the Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China and Bank of Communications, each provided more than Rmb100 bn. In total, 17 banks provided interbank loans worth about Rmb1.3 trillion through July 13, 2015.

The central bank later confirmed it had provided loans directly to CSF, without specifying an amount. The Shanghai Composite closed up 3.5 on Friday, capping its second straight week of gains.

(Comment: The CSF was established in 2011 to lend to securities brokerages to support margin lending to stock investors.)
 






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