Markets

China WMPs investing in each other - risks a default chain reaction

Wealth Management Products (WMPs) in China are used as investment vehicles by individuals, into assets like stocks, corporate bonds, derivative products and so forth

  • But now the WMPs are more and more investing in each other
  • Estimates of this are around $396 billion

Uh-oh. A bad investment by one WMP could now leach into and infect another one, or more.

The big risk is that:

  • In the event of widespread losses, cross-ownership will create more uncertainty over who's vulnerable -- a key source of panic in 2008 when soured U.S. mortgage securities triggered a global financial crisis.

In case you were having a good day, chilled out about the prospects for a resurgent China ... Bloomberg has more :-D

Haven't heard this for a while

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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