Pass the parcel

Hong Kong

HONG KONG's stock market is shining a new light on the dark arts of Chinese finance. The country's mid-sized lenders have become skilled at repackaging loans to look like lower-risk investments. Two impending share offerings from state-backed banks underscore how such wizardry has fuelled growth.

In recent years, mid-sized Chinese banks have devoted an increasing proportion of their balance sheets to various investment products, often issued by other financial institutions. These vehicles, known as trust plans, asset management plans or wealth management products, tend to be backed by loans or bonds, though it's often hard to tell exactly where the money has ended up.