Online lenders risk being China's next bubble

Beijing

WITH no sense of irony, China's online finance platforms are marketing themselves as a haven from gyrating stocks just as ratings companies warn the industry is brittle and failures could cause investors losses.

Among market leaders, Renrendai.com said in a text message to users that its service, which links lenders to buyers of furniture or entrepreneurs starting businesses, offers a "sedate shelter" from stock-market volatility. Jimubox.com sent a message to clients saying that equities are going "insane" and offering cash incentives for investment.

Appeals from the more than 2,000 so-called peer-to-peer lenders in China's massive 41 trillion yuan (S$9.029 trillion) shadow banking system are drawing investors to a lightly regulated business. The securities watchdog this week banned all such firms from lending for stock purchases after at least two failed due to delinquencies.…