Monday, March 17, 2014
Markets hold breath as China's shadow banking grinds to a halt
◼ Fresh loans in China’s shadow banking system evaporated to almost nothing from $160bn in January - Ambrose Evans-Pritchard/Telegraph (AFP image)
A slew of shockingly weak data from China and Japan has led to a sharp sell-off in Asian stock markets and the biggest one-day crash in iron ore prices since the Lehman crisis, calling into question the strength of the global recovery.
...Fresh loans in China’s shadow banking system evaporated to almost nothing from $160bn in January, suggesting the clampdown on the $8 trillion sector is biting hard.
“It seems that rising default risk has started to erode Chinese investors’ confidence,” said Wei Yao, from Societe Generale. “Together with continued regulatory tightening on banks’ off-balance-sheet activity, we are certain this slowing credit trend has further to go and will inflict real pain on the economy.”...