MarketWatch Financial institutions have become more cautious about lending money to investors playing the A-share market, which is seeing its strongest rally in nearly eight years, even as analysts issue warnings of a collapse. By Zhang Yu and Han Hui via Caixin Online
'Through umbrella trusts, stock investors used to be able to borrow up
to 5 times the amount of their own capital, the vice president of a
trust company said. The firm cut the ratio to 2 in June and may reduce
it further, he said. He added that there was still a net inflow of
capital through the company to the stock market, but the amount was
growing more slowly.
'Many private asset-management companies
through which stock investors can borrow money have lowered their limits
for borrowing as well.
'Zhang Kaixing, founder of jfz.com, an
investment website, said it permitted borrowing of up to 5 times the
amount of principle investment. In April, the ratio was cut to 3 times
'Investment website miniu98.com imposed a similar restriction on borrowing for stock investment in May.
manager from Shanghai Tuopai Asset Management Co., which allows stock
investors to borrow money, said demand has weakened a bit compared to
the December-April period, when the benchmark A-share index soared by
1,000 points to 4,000. The firm used to permit borrowing of up to 5
times, he said. Now the ratio has been cut to 2 to 3 times.'