China issues draft rules restricting entrusted lending

Shanghai

CHINA'S banking regulator has issued draft rules to tighten supervision of entrusted loans, a kind of shadow banking product, in a move seen targeting excessive leverage used to speculate on stocks.

The move follows an announcement on Friday that regulators would crack down on excessive margin finance by certain brokerages, and Chinese stock markets plunged on Monday as regulators signalled concern about valuations in the wake of a massive stock rally in the fourth quarter of last year.