721 P2P Lending Platforms Close in First Half of 2018, 71pc Went Dark

P2P lending platforms are going down like flies, iwth roughly 1 in 5 lending platforms closing its doors in the first half of 2018. Large firms are as risky as small. Ownership structure doesn't matter either. Private, state-financed , state-owned and publicly listed platforms have all shuttered. The government estimates 50 million people are users of these platforms and more than 2,800 are still in operation. The average yield on the platforms is above 10 percent. An unfortunate number since the head of the CBRC recently said that if illegal fundraising offers a yield above 10 percent, be prepared to lose 100 percent of your principal.

QQ: P2P上半年已有721家消亡!上海、浙江成爆雷重灾区
Since June this year, the online lending industry has been quite uneven. According to the incomplete statistics of the online loan home, the number of closed and problem platforms in June was 80, of which 63 were problem platforms. That is to say, in June, nearly 3 platforms were closed or had problems every day. According to a report released by the National Internet Financial Risk Analysis Technology Platform, as of June 30, the number of P2P platforms that died in the first half of the year has reached 721.
Tight liquidity is crushing the P2P companies as it did in June 2015, still the highest single month for P2P platform closures. It's unclear how the numbers are tabulated because I found the original report and it says 193 platforms closed in March. Dead platforms are in orange, new in blue.
The platform is not compliant, the liquidity is tight, etc.

  June is the highest peak of the single-month problem platform in the past year. In history, the highest peak of the single-month problem platform was in June 2015, and the number of single-month problem platforms reached 114. This phenomenon at the time was related to the tight capital in the middle of the year and the plunge in the stock market.

  For this explosion, Dong Xiwei, a senior researcher at the Chongyang Financial Research Institute of Renmin University of China, told China Fortune Network that, first of all, from the perspective of the online lending platform itself, many platforms are not in compliance. After several years of operation, risks gradually build up. , entering the stage of frequent outbreaks.
Tighter regulations are also hurting the business and slowing the approval of loans. This has caused investors to turn away from the platforms. Any that were operating some form of speculative or Ponzi finance (the Minsky definitions of borrowing to repay existing debt or borrowing to repay interest and existing debt), and in some cases operating actual Ponzi schemes as covered in ¥80 Billion, 3-Year Old Online Lending Platform With 10M Users Implodes, May Be Ponzi and Regulators Shut 4th P2P Lending Platform This Year After Customers Unable to Withdraw Cash.
Secondly, from the perspective of supervision, with the continuous deepening of the special rectification work of Internet financial risks, the regulatory policies have gradually tightened and the uncertainty has increased. In addition, the delay in the filing of online loans has also led to a decrease in the number of investors on the platform.

  Again, from an investor's perspective, investors' risk awareness has improved. For example, Guo Shuqing, chairman of the China Banking Regulatory Commission, recently suggested that the investment risk should be raised in the Lujiazui Financial Forum. If the illegal fund-raising yield exceeds 10%, it is necessary to prepare for the loss of the entire principal. Investor education continues to deepen, investors have raised awareness of risk prevention, and a considerable number of investors have begun to withdraw from high-risk platforms.
Government deleveraging efforts are also biting the P2P lenders:
Finally, judging from the recent market liquidity, this year, although the central bank has implemented three targeted RRR cuts, the liquidity of the entire market is still tight, which may indirectly induce insufficient follow-up funds for some platforms, and then cause a thunder.

  According to the analysis of the research report of the online loan home, in addition to the strictening of supervision, the delay of filing of online loans, and the impact of the stock market crash, the operating costs and compliance costs of the platform are increasing, the overdue rate of borrowers is rising, and non-compliance and management The poor platform is constantly causing problems.
These platforms aren't blowing up in far flung rural areas, but in the wealthiest parts of China: Shanghai and Zhejiang.
Shanghai, Zhejiang are the disaster-hit areas

  Big platform will also have an accident

From the geographical distribution, Shanghai and Zhejiang have become the hardest hit areas of the explosion. According to the data of the online loan home, in June, 80 companies were closed down and the problem platform was mainly distributed in 15 provinces and cities nationwide. Among them, Zhejiang Province had the most closed and problem platforms in June, reaching 22; followed by Shanghai, a total of 21 Home; 10 in Beijing and Guangdong.
It doesn't matter if the platforms are large or small, state-owned, state-financed or private, they're all blowing up.
From the perspective of the platform itself, whether it is a large platform or a small platform, the state-owned department or the listed company system has the potential to explode. Niu Banjin has received a 2 million A round investment from Chunxiao Tianze, a subsidiary of GEM listed company Tianze Information; Qian Mancang is a 15% stake in the full stock of Tianma shares of the listed company; the car loan platform Xiaoluong Jinfu was once The military state reserves for half a year and so on.

  According to the data of the online loan home, the number of closed and problem platforms in June was 80, of which 70 were private-sector platforms, and 9 were state-financed platforms, 4 of which were state-owned platforms, and 1 was a listed company whose platform experienced difficulty in withdrawing cash.
Online lending platform financing fever rebounded sharply

In the risk explosion period of the P2P industry, financing activities suddenly became active. According to the data of the online loan home, there were 6 financing incidents in June, and the total financing amount reached 3.48 billion yuan, much higher than the 2 cases of financing in May.
In this regard, Dong Xizhen told China Fortune Network that the capital market is more rational towards investment in P2P platforms. After the industry's major reshuffle and clearing process, the remaining platforms will have certain advantages, strong strength, and more industry concentration. High, thus attracting capital layout to a certain extent.

  The central bank announced that it will complete mutual finance rectification in one to two years.
Investment still needs to be cautious

In the face of frequent explosions, investors still need to be vigilant. On July 9, the official website of the central bank announced the next phase of work on the special rectification of Internet financial risks. Give a timetable for rectification, and then complete the special rectification of Internet financial risks in one to two years, resolve the stock risks, eliminate potential risks, and initially establish a regulatory system that adapts to the characteristics of Internet finance. It is foreseeable that Internet finance will accelerate the reshuffle in the future.

  Liu Xiaochun, executive director of the Internet Law Research Center of the Chinese Academy of Social Sciences, and assistant researcher Xia Jie issued a message reminding investors that for online lending platforms, investors should pay attention to the fraudulent behavior of the platform's fictional high-yield projects, and observe the platform's operational capabilities to see if they can match. Control the need for risk, etc.

  Xue Hongyan, Senior Research Institute of Suning Financial Research Institute, told the media that investors should reduce the proportion of investment and reduce investment expectations. On the one hand, appropriately reduce the proportion of P2P investment in asset allocation and avoid trend risks; on the other hand, reduce income expectations. Moderate return to the head platform.
The government report (2018年上半年P2P发展监测报告)shows that many platform operators simply disappeared, as their website was inaccessible for a long-time. This made up 71 percent of first-half platform deaths. Only 2.5 percent appear to be voluntary shutdowns by the company.
Guangdong, Beijing, Zhejiang and Shanghai have the most platforms in operation:
According to the monitoring of the technology platform, the geographical distribution of China's P2P platform is relatively concentrated. 2,835 operating platforms are mainly distributed in Guangdong, Beijing, Zhejiang and Shanghai. In the four provinces and cities, there are 1,720 P2P platforms in operation, accounting for 60.6% of all operating platforms.
The monitoring results of the technology platform show that the number of P2P users in China exceeds 50 million. According to statistics from various parties, the per capita investment amount of China is 22,788 yuan, mainly distributed in Guangdong, Zhejiang, Jiangsu and other places. At the same time, the technology platform analyzes the age of P2P investment users and finds that China's P2P investors are mainly concentrated between 20-40 years old, with the largest number of people aged 20-29, accounting for 29.73%.
The technical platform's gender statistics on P2P investors show that investors are mainly male, and male investors account for more than 60%, much higher than female investors.
Guangdong has the most users at 16 percent. Guangdong has only 8 percent of China's population, but it is a relatively wealthy province. Users are fairly spread out geographically.
According to statistics, investors are mainly distributed in Guangdong, Zhejiang and Jiangsu; Sichuan, Shandong, Henan and other places are also important distribution areas for P2P investors in China.
Remember the quote from Guo Shuqing, head of the CBRC? "If the illegal fundraising yield exceeds 10 percent, be prepared for 100 percent losses." What is the average yield on P2P platforms?
(II) Rate of return and term of borrowing

The technology platform monitors the P2P platform's yield and borrowing period. In the first half of 2018, the average yield of China's P2P platform projects was 10.2%, of which the average yield in June was 10.39%, up 0.11 percentage points from the previous month. The recent P2P average yield has an upward trend.
Loan periods are getting longer:
In the first half of 2018, the average borrowing period of China's P2P platform was 198 days (the arithmetic average). The loan period in June was 17 days longer than that in January. The average borrowing period in the first half of 2018 showed an increasing trend.
Companies broke all manner of rules:
The technology platform continuously monitors violations of the P2P platform. The technology platform has accumulated more than 2,000 P2P platforms that are suspected of self-dealing, self-protection, campus loans and other illegal business, false publicity, inductive publicity, servers outside the country, and high yields. The new technology platform in the first half of 2018 involves the above, nearly 280 problem platforms.

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