Equities

Reuters reveals response to Chinese pledged share meltdown stirs concern

Reuters reveals response to Chinese pledged share meltdown stirs concern

Reuters detailed how scores of Chinese brokers and banks are struggling under the weight of hundreds of billions of dollars worth of loans to companies using their own plummeting shares as collateral. The practice boomed last year amid a crackdown on shadow banking, but now, as share prices collapse and collateral withers, creditors are suffering. About $620 billion worth of traded Chinese shares, or 10 percent of total market capitalisation, has been pledged, mostly by small and medium-sized companies, which have been hit hardest by a slowing economy and the Sino-U.S. trade war.