Hunan Pooled Trust Lowers Minimum Investment to ¥200,000; Tough To Sell Investors At Higher Minimums

What follows is a summary of this article: 湖南信托再现资金池产品 20万门槛露流动性焦灼

Hunan Trust has a pooled trust with low minimum investment of ¥200,000. Trust firms lowered the minimums during the cash crunches last year, so this has drawn the attention of journalists looking for the next failed trust.

The firm recently launched four products; two have minimums of one million yuan, but two have the lower threshold. The two in question are 汇金69号 "Huijin 69" and 湘信-汇金68号 "Huijin 68." In September the firm launched 10 products, 8 of which also had a 200,000 yuan minimum investment. These products proved extremely popular: one customer told the reporter that they waited for 2 months (wait listed) before they could invest.

This series of products offer the lower minimum investment, a return of 7 to 7.8%, a 25-month holding period and total assets of less than 20 million yuan. One characteristic of this product is their investments are mysterious: none of the customers contacted by the reporter had any idea what the fund was invested in. The contract did not specify what the fund invests in. A trust analyst believes this is really a trust pool; the money is invested in the firms other trust products. The analyst noted that it is tough to sell 7% products with higher minimums these days.

Another analysts note that it is easy for these pools to become black holes, with little transparency for investors.

The reporter writes that what is behind the issuance of these "trust of trusts" is liquidity management worries. At the 2013 year-end meeting for the trust industry, Yang Jiacai of the CBRC said that trust payment crises will be much higher in 2014 and the registration system in a necessity for the industry. Haitong Securities estimates that 50% of trust will come due in 2014 (I have seen 30% and 40% elsewhere; all three are very high numbers). The industry is also developing its secondary market for trusts.

Hunan Trust increased its registered capital from 700 million yuan to 1.2 billion yuan in 2013. The article mentions that the firm sells a lot of the financing trusts; that type of trust product has seen demand collapse in 2014.

No comments:

Post a Comment