Bank loan bar 'vital' for health of stock market
By Zheng Li (China Daily)Updated: 2007-03-14 08:56
The move to stamp out the practice of siphoning off bank loans for stock
market speculation is set to have a positive impact in the long run and help
financial stability, say analysts.
Liu Mingkang, chairman of the China Banking Regulatory Commission, said his agency had
evidence of "relatively serious" misuse of bank loans for stock market
speculation and would crack down on such irregularities.
Liu said this on
the sidelines of the annual session of the National People's Congress,
confirming a long-circulated market rumor.
The regulator issued a
directive in January, reminding banks and financial institutions of the hazards
of their association with securities brokerages and ordering them to investigate
the problem of misuse of banks loans.
China's stock market, which
reversed its five-year slump and gained more than 130 percent last year, is
still going strong this year. The climbing index has lured a growing number of
investors into the market.
A record 700,000 new stock and fund accounts
were opened in the first week after the week-long Lunar New Year festival break,
according to figures from the China Securities Depository and Clearing
Corporation Limited.
The total number of stock accounts had reached an
all-time high of 83.57 million by March 2, it said.
But at the same time,
many individuals and institutions have turned to bank loans to invest in the
stock market.
"The number of consumer credit and other credit with no
specific stated purpose has increased dramatically and we are scrutinizing the
problem," said Fan Wenzhong, deputy director of CBRC's Research
Bureau.
Although specific figures are not available, many analysts and
market watchers say consumer credit and housing mortgages are easy prey that are
often misused in the stock market.
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