Off-balance-sheet lending tying banks to China's volatile stock markets

Growing interconnectedness with China’s stock markets has greatly shifted the risk profile of shadow banking even as traditional bank lending accounted for a greater share of the country’s total financing in March, South China Morning Post reported, citing Moody’s Investors Service. “What we are fairly confident about is that securities companies are raising funds through what are essentially repo loans and investing in the equities market,” said Michael Taylor, managing director for credit policy at Moody’s in Hong Kong. Moody’s data also showed trust company investments in property and infrastructure fell from about 50% in 2011 to about 30% in 2014, while investments in financial institutions and the securities market surged to about 25%.