26/11/18

Billionaires "Prepare" For Next Crash With Rush Into Stock-Pledged Loans



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Billionaires "Prepare" For Next Crash With Rush Into Stock-Pledged Loans
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One of the reasons why Chinese stocks suffered a sharp selloff in mid-October was the result of some 5 trillion yuan in stock-pledged loans issued against stock collateral, and which as a result of the sharp drop in Chinese markets, had gone underwater, prompting banks to remand repayment as LTVs rose above 100%.

The result was a broad liquidation of any unencumbered assets by the creditors, which forced Chinese authorities to intervene and demand that banks become more lenient in demanding loan repayment, effectively implementing yet another stealthy bailout of Chinese markets.

Commenting on China's broad (ab)use of loans issued with stock as collateral, one month ago Goldman said that "users of financial leverage in equities have shifted from ....

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