Loans used to invest despite ban in China
Punters use cheap and unsecured loans to buy stocks, raising risks for borrowers and lenders
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An investor in China looking at a screen showing stock market movements in July. With the economy reeling from the pandemic, policymakers in China have pumped out liquidity and eased curbs on shadow banking to backstop small businesses and struggling families. But punters exploited the loopholes, using quick cash to invest in everything from high-yielding structured deposits to wealth management products to stocks.
PHOTO: AGENCE FRANCE-PRESSE
After receiving dozens of phone calls and text messages from banks touting cheap, unsecured and easy-to-get consumer loans, Mr Eric Zhang visited one of China's largest lenders in June and borrowed 400,000 yuan (S$80,000) at an interest rate of 4 per cent.
But there was a catch - he had to sign a letter promising the money would not be invested in property or stocks. That did not stop him.
