China is bringing in new rules that will scrap restrictions on banks on how they can invest money raised from wealth management products (WMPs), Caixin reports, possibly in a bid to direct capital to the country’s struggling securities industry.
Previously, Chinese commercial banks selling WMPs had to sign a self-discipline commitment to limit their investments to fixed-income products.
They are now free to spend that money on any type of financial product available within current regulations, according to the China Securities Depository and Clearing Corp. (CSDC), allowing China’s Rmb 30 trillion ($4.5 trillion) of WMPs to be invested in stocks.
China’s mainland stock exchanges have continued to slide since the beginning of the year, pushed down by fears of an economic slowdown and increased friction with the US over trade. On Monday the Shanghai Composite fell its lowest in almost four years.