China Trusts Fuel Stocks With 28% Jump in Investment
China’s trusts, part of the shadow-banking industry, fueled a stock-market rally by boosting their investments in equities by a record 122 billion yuan ($19.5 billion) in the fourth quarter.
The increase, reported by the China Trustee Association on Friday, was the biggest by value in data starting in 2010. The 28 percent gain was the largest since the third quarter of 2010.
China’s capital controls and weakness in the property market have helped to channel money into stocks, driving a 35 percent surge in the Shanghai Composite Index over three months. Trusts’ assets under management grew at the fastest pace in six quarters, gaining almost 8 percent to 13.98 trillion yuan. Investment in equities totaled 552 billion yuan.
So-called umbrella trusts, which allow more leverage than broker financing, have played a role in the stock boom.
At the end of last year, China had 369 “risky” trust products valued at 78.1 billion yuan, the statement showed, down from 82.4 billion yuan three months earlier.
Source: Bloomberg – China Trusts Fuel Stocks With 28% Jump in Investment
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