Wealth management products have been used to funnel RMB300 billion (US$48.27 billion) into shares, highlighting the growing popularity of a potential alternative venue through which investors can finance stock plays in the wake of a crackdown on margin lending, Bloomberg reported, citing an estimate from Goldman Sachs. Mainland equities plunged Monday after three of China’s biggest brokerages were suspended from loaning money to new equity trading clients. “The tightening of margin finance by brokerages will cause more funds to flow into stocks through banks’ [wealth management products],” said Ma Kunpeng, an analyst at Sinolink. (See CER’s recent rundown of how these products work for more.)
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