Actionable insights on equities, fixed-income, macros and personal finance Start 14-Days Free Trial
Actionable investing insights Get Free Trial

China: Loans diverted to stocks, but not real estate


Bloomberg: Chinese loans diverted to stocks

As much as 660 billion yuan ($97 billion) may have been converted by companies into term deposits or used to buy equities, Li Huiyong, Shanghai-based analyst at Shenyin Wanguo, said in a phone interview today, citing money supply figures.

China’s banks lent a record 1.62 trillion yuan in January as part of a government drive to stimulate the world’s third- largest economy, while M2, the broadest measure of money supply, climbed 18.8 percent from a year earlier. The Shanghai Composite has surged 29 percent since the start of 2009, compared with a 10 percent decline in the MSCI World Index.

“Part of the liquidity flowing into the stock market could be from companies using borrowed funds to invest in the stock market instead of working requirements,” said Li.

No demand, no production. You give us money, we trade stocks.

And: Home Prices on Hong Kong’s Peak Fall Most in Decade

Home prices on the Peak, Hong Kong’s most-expensive residential area, had their steepest decline since the Asian financial crisis a decade ago, real estate agency CB Richard Ellis Group Inc. said.

Prices slumped 30.5 percent in the fourth quarter of 2008 from a year earlier as the recession damaged demand, the biggest drop since the third quarter of 1998’s 45 percent, said Margaret Ng, senior director of Greater China at CB Richard Ellis.

So they’re not using the loans to buy real estate? Wait, that’s what caused the whole damn thing to crash in the first place.


Like our content? Join Capitalmind Premium.

  • Equity, fixed income, macro and personal finance research
  • Model equity and fixed-income portfolios
  • Exclusive apps, tutorials, and member community
Subscribe Now Or start with a free-trial