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Chinese banks banned from lending to private investors buying up commodities

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Chinese officials fear speculative heating up of the commodity market and multiple bankruptcies of private investors who are unable to bear such risks.

Chinese banks banned from lending to private investors buying up commodities

China's banking regulator has asked lenders to stop selling commodity futures investment products to individuals to limit investment losses amid volatile commodity prices, reported to Reuters.

An order from the China Banking and Insurance Regulatory Commission (CBIRC) has not been previously reported on these products.

“The risk in commodity-related bank investments cannot be easily detected by ordinary investors and they cannot bear it,” said one source. "Banks also lack the experience to properly manage such products."

The move is driven by skyrocketing commodity prices in both onshore and offshore markets, raising regulatory concerns about the risks of speculative rates, prompting the Chinese government planner and exchanges to take price control measures here in recent weeks. ...

Regulators are concerned that private individuals investing in ore and metals futures could get burned again by sharp fluctuations in commodity prices triggered by a recovery in demand after the pandemic, reduced liquidity and speculative trading. Government observers called on Chinese metallurgical companies to maintain market order.

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