China traders ramp up leverage in bet PBoC to stay on sidelines

While an increase in leverage usually concerns Beijing, analysts say policy makers are set to stay on the sidelines at least for the near future. That’s because the People’s Bank of China (PBoC) (pic) aims to keep liquidity loose to aid an economic recovery that has stuttered in recent months.

BEIJING: China’s financial institutions are once again boosting leverage to wager on everything from government bonds to corporate debt, triggering debates on whether the central bank is likely to intervene.

The turnover of overnight repurchase agreements has climbed above four trillion yuan (US$626bil or RM2.7 trillion) on each of the the past 18 days, the longest stretch on record, according to official data.