 | An increased number of Chinese have been investing in their stock markets in recent years, encouraged by the unrefrainable growth of local businesses and the economy. Last week we saw the market fall rapidly resulting in 24h of turmoil and negative values. |
The Chinese Stock Markets fall, although not for an extended period of time, had severe consequences on the local peer-to-peer marketplaces. In particular the local regulator, the China Securities Regulatory Commission (CSRC), sent out a communication forbidding the platforms to offer loans for buying shares at stock markets.
In fact, in the huge Chinese P2P lending market, which counts more than 2000 players and an approximate $48 billion, the loans used for leveraged share purchases represented a consistent part of the local total market, which notably is still developing in a grey area.
China’s securities regulator have now tightened scrutiny of trading on margin including borrowing money to buy stocks—outside of approved channels as part of wide-ranging efforts by the government to stabilize share prices. This led many operating peer-to-peer companies to announce the withdrawal of such type of loan from their marketplaces.
Although a small one, this is another step towards a more transparent and regulated alternative finance market in China.
References
China P2P Lenders in Cross Hairs as Regulators Curb Share Loans. Bloomberg.com (2015)
In fact, in the huge Chinese P2P lending market, which counts more than 2000 players and an approximate $48 billion, the loans used for leveraged share purchases represented a consistent part of the local total market, which notably is still developing in a grey area.
China’s securities regulator have now tightened scrutiny of trading on margin including borrowing money to buy stocks—outside of approved channels as part of wide-ranging efforts by the government to stabilize share prices. This led many operating peer-to-peer companies to announce the withdrawal of such type of loan from their marketplaces.
Although a small one, this is another step towards a more transparent and regulated alternative finance market in China.
References
China P2P Lenders in Cross Hairs as Regulators Curb Share Loans. Bloomberg.com (2015)
 | About the author- Irene Tordera Born and raised in Milan, Italy, Irene is an International Business graduate, with a strong interest for innovative ideas that can simplify our lives. During her studies, she co-founded an online community for sportspeople and worked in marketing positions at Ogilvy & Mather Advertising and at the European Business Angel Network, in Brussels. She is a passionate blogger about crowdfunding and the startup ecosystem. |
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