- Worries about the health of industries with massive overcapacity have many banks cutting lending to certain sectors by up to 20%, reports Reuters. At the same time, Beijing has asked banks to include loans linked to derivative products and debt financing along with regular reports of outstanding loans by sector.
- The specific sectors facing audi are steel, cement, aluminum, smelting, flat-glass, and shipbuilding, says a bank source, and one area of particular concern is the common practice of bank loans backed by commodities like steel and copper.
- The moves come in the wake of last week's landmark bond default by Chaori Solar as well as the default of a coal-related high-yield trust product, but is it the real deal? Stories of Beijing cracking down on industrial sectors with excess capacity have been floating around for a decade, but the train has kept on rolling (or bubble inflating, depending on your point of view). FXI -2.2%
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