Here We Go Again: China Packaging Stock Margin Loans As Asset Backed Securities

On July 1 Chinese regulators gave approval to a then little noticed provision that today is allowing for the repackaging of margin loans into securitized products and being sold as investments. Such is another government effort to support the Chinese stock market, but will it lead to a similar fate as that of the U.S. attempts to securitize mortgage loan products in 2008? Chinese brokerage firm selling $80 million in securitized margin loan products Huatai Securities is selling 500 million yuan ($80 million) of the country’s first asset-based securities product. Unlike U.S. asset-backed securities, famously built on real estate and…