REFILE-China stocks plunge after crackdown on credit products, margin trading

lunes 19 de enero de 2015 01:13 GYT

(Adds letter to analyst name in 3rd paragraph, making it Changchun)

* CSI300 -6.3 pct, SSEC -6.3 pct, HSI -1.1 pct

* Margin trading penalties cause plunge in brokerages

* Draft rules on entrusted loans hit bank stocks

By Sue-Lin Wong

SHANGHAI, Jan 19 (Reuters) - China stocks collapsed in morning trade on Monday, with financials hammered after regulators cracked down on credit products that have been blamed for fuelling excessive market speculation over the past three months.

Brokerage shares tumbled after the securities regulator punished industry heavyweights for illegal operations in their margin trading business while banks were hit after the banking regulator issued draft rules to tighten supervision of entrusted loans, a kind of shadow banking product.

"The entrusted loan regulation and margin trading penalties had combined impacts on market sentiment, adding to volatility and leading investors to turn negative," said Du Changchun, analyst at Northeast Securities in Shanghai.

"These two regulatory moves, in essence, hinder capital inflows, which have been the most significant reason behind the market's recent rally," he said.   Continuación...