Borrowing to Buy Stocks Pushes Up China’s Record Household Debt

Banks and financing platforms are being swept along as punters look for quick cash to bet on the world’s most volatile equity market. It’s a dangerous strategy both for already overextended households as well as lenders, one that’s drawing closer scrutiny from regulators, Bloomberg News reported. Authorities are also partly to blame. With the economy reeling from the pandemic, policy makers have pumped out liquidity and eased curbs on shadow banking to backstop small businesses and struggling families. The easy money has fueled arbitrage with retail investors and corporates tapping the cheaper rates to invest in everything from high-yielding structured deposits to wealth management products and stocks. Leverage has climbed even as millions of Chinese lost their jobs during the pandemic. Read more

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