ML-Implode News - Shadow lending crackdown looms over China's stock market

... regulators are cracking down on shadow lending to stock investors, a campaign analysts say is partly to blame for last week's 13 per cent fall in the Shanghai Composite Index -- the largest weekly drop since the global financial crisis in 2008.
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Official margin lending totalled Rmb2.2tn ($354bn) as of Wednesday's close, up from Rmb403bn a year earlier, according to stock exchange figures. Yet this officially sanctioned margin lending, which is tightly regulated and relatively transparent, is only the tip of the iceberg for Chinese leveraged stock investing.
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A universe of so called "fund matching" companies, known in Chinese as peizi, has sprung up over the past year to provide margin funding to virtually anyone who asks. Officially registered as consulting companies, these groups also subscribe to the subordinate tranche of umbrella trusts.

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Shadow lending crackdown looms over China's stock market