2019-07-19

Kaifeng Cancels Sales Restrictions After 20pc Discounts Fail

iFeng: 房价打8折都卖不出去!开封,“开封”了
Sogou: The house price can't be sold with a 20% discount! Kaifeng is Open
According to the document, in order to coordinate the regulation of the real estate market and boost market confidence, the decision was made at the regular meeting of the Baicheng Office (Note: Office of the Leading Group for Quality Improvement Project of Baicheng Construction in Henan Province). The time limit for new commercial housing to be listed and transferred after 3 years from the date of obtaining the "Real Estate Ownership Certificate" is hereby cancelled, and the time limit for freezing the trading qualification of houses that have been cancelled for the record is cancelled.
From January to May 2019, Kaifeng's real estate business income dropped 2.7% from the same period last year.
In terms of land, statistics show that in the first half of 2019, the average floor price of the land sold in Kaifeng city was 3019 yuan/square meter, down 6.8% year on year, and the premium rate remained low.
An insider from Henan real estate industry introduced to the reporter of "Magnesia Real Estate." Kaifeng's real estate market has been gradually declining since the beginning of this year. Many developers have started to offer discounts under various names, such as "special price rooms" and "anniversary celebrations". Even the total house price discount has reached 20% but it still hasn't improved. Many companies' sales performance in Kaifeng area is at the bottom of the whole Henan area.

iFeng: 确认!开封取消新房限售 住建局:炒房现象已基本遏制
Sogou: Confirm! Kaifeng Cancels Restriction on Sale of New Houses

China Happening or Not

I have spent many years blogging about China's rise and the economic risks within China. I do not believe there is much more to be said about the risk of a credit crisis/currency devaluation in China. It is either going to happen or it isn't. Here's a good summary of how we're again at a crisis point. The authorities will put the denouement off for another day, or the they won't.

Rhodium Group: Beijing’s Credibility and the Baoshang Bank Dilemma
The dilemma is fundamental: Does Beijing want the market to price the risk of potential bank failures, or do authorities want “stable” production of riskier and riskier forms of credit? Beijing can have one or the other, not both.
There's no stable way to switch from non-market to market pricing. You can hide the effects by making the switch after a crisis, but there will always be instabilities. Any system that is controlled for decades will suffer from extreme volatility. If the data is announced, pressure will build in the system as speculators start betting on what will happen once the curtain lifts.
The PBOC’s initial foray in managing the financial stress produced by Baoshang was to send a message that this failure is a one-off related to political affairs—the bank’s primary shareholder was the Tomorrow Group controlled by arrested financier Xiao Jianhua. However, no one knows exactly why this political risk suddenly materialized in late May, and Baoshang’s financial asset profile is similar to many other banks that are in similarly vulnerable positions, particularly under new accounting standards (IFRS 9). Some of these banks are listed and some are not, but larger banks are treating many of them similarly: by reducing the number of banks with whom they are willing to do business.

Because markets quickly started seeing similarities between Baoshang and the Bank of Jinzhou, a listed bank in Hong Kong whose external auditors recently resigned, the PBOC was forced to provide emergency assistance to that bank, effectively guaranteeing its interbank borrowing through negotiable certificates of deposit (NCDs).
Key point:
The PBOC has no history in managing counterparty solvency risks in the interbank market. They just created these risks seven weeks ago. Moreover, the evidence is right in front of us in the form of NCD sell-through rates in the markets, which show that small banks rated AA+ and below are still selling only 20-50% of their interbank NCDs offered in recent auctions, even over the past week (Figure 1), down from 65-75% before May 24. If large banks are comfortable lending to small banks, why won’t they buy their NCDs, which are claims on banks’ creditworthiness?
The kicker:
Beijing cannot restore faith in implicit guarantees or see interbank business return back to pre-Baoshang levels, as policy-makers try to arrest the aggressive expansion of small financial institutions and push for deleveraging. Investors will need to reprice risks in the market and small banks will inevitably face balance sheet contractions and higher funding costs, which also means higher interest rates for their borrowers.
You go to market with the hypothesis you have. The CCP and PBoC have near omnipotent powers over the economy or they don't. I'm betting they don't. I do not know when it'll be triggered, but as in 2011, 2014 and 2016, there is once again signs of something larger being possible. Personally, I believe the time for understanding it has aleardy passed. Now is the time to be trading it or patiently waiting for the zero hour.

2019-07-16

Suzhou Bank About to IPO, Has Two Defaulted Trust Products

Sina: 苏州银行2笔信托计划投资违约 评级报告提醒关注风险
Sogou: Suzhou Bank Draws Attention to Risks in Two Trust Plan Investment Default Rating Reports
Financial Association (Beijing, Reporter Li May)-Soochow Bank (002966.SZ), which is about to list on A shares, will face certain pressure of development and risk control in its trust and asset management plan in the future.

"Some investments have defaulted, and the future recovery of funds has yet to be continuously observed." On July 16, Joint Credit released a rating report on Suzhou Bank, saying that as financial supervision becomes stricter, attention should be paid to future related risks and the potential impact on liquidity formation.

The above rating report shows that by the end of 2018, Suzhou bank had defaulted on two trust plan investments. the underlying assets were trust loans, namely, 300 million yuan trust loans to Nanjing yurun food co., ltd. and trust loans to Wuxi bosheng asset management co., ltd., with a book balance of 131 million yuan.

Among them, the first trust loan guarantee is guaranteed by the group and the actual controller. At present, this investment has been classified into suspicious categories according to the five levels, and impairment reserves have been accrued according to the proportion of 50%. The second trust loan is guaranteed by the actual controller and his spouse's full joint and several liability guarantee and the commercial real estate collateral guarantee located in Wuxi. At present, this investment has been classified into sub-categories according to the five levels, and impairment reserve is accrued according to the proportion of 25%.

In fact, under the background of strict financial supervision, Suzhou Bank has appropriately controlled the proportion of investment assets (bond investment, trust plan and asset management plan investment, wealth management product investment, etc.) in total assets and adjusted the structure of investment assets in 2018. At the same time, the provision for impairment of receivables investment has been increased. As of the end of 2018, the total investment assets amounted to 98.255 billion yuan, and the balance of impairment provision for receivables investment and available-for-sale financial assets totaled 635 million yuan.

Data show that by the end of 2018, the balance of Suzhou Bank's bond investment, trust plan and asset management plan investment and wealth management product investment were 38.142 billion yuan, 33.014 billion yuan and 15.788 billion yuan respectively. The balance of the first two and the proportion of assets under investment both declined.

It is understood that Suzhou Bank Trust Plan and Asset Management Plan are mainly invested in government financing platforms and state-owned enterprises focusing on infrastructure construction. The regions are concentrated in the locations of Suzhou Bank branches. Counterparties include trust companies, asset management companies, securities companies and fund companies. The average investment period is about two years.


"Suzhou Bank has incorporated trust plan and asset management plan investments into the bank-wide unified credit granting, and the authorization and approval refer to the credit approval process," said the above rating report. It also implements "list system" access classification management, conducts "penetration" analysis on the invested assets according to the principle of "substance over form", and fully sets aside asset impairment reserves for the risky investment assets according to the standard.

However, the rating report also reminds that the trust plan and asset management plan of Suzhou Bank are still relatively large in scale. As the regulatory requirements for interbank financial management and non-standard investment are stricter, Suzhou Bank will face certain pressure in the future development of such businesses.

As of the end of the first quarter, Suzhou Bank had total assets of 315.211 billion yuan and total liabilities of 291.521 billion yuan. In 2018, Suzhou Bank realized operating income and net profit of 7.737 billion yuan and 2.314 billion yuan respectively, up 12.15% and 7.64% year on year. The NPL ratio and provision coverage rate were 1.68% and 174.33% respectively.

The latest announcement of Suzhou Bank shows that it will hold an online roadshow on July 17 and purchase on July 18, with no more than 333 million shares to be publicly issued. "After the A-share listing is completed, Suzhou Bank's capital replenishment channels are expected to be further expanded and its capital strength will be enhanced," the rating report said. Suzhou Bank's main long-term credit and financial bond credit ratings are AAA, and the outlook is stable.

China: 4 Bonds Default in One Day, All Private Firms

The amounts aren't huge, but as the headline says, it's rate to see so many bonds default on the same day.

Sina: 罕见!一天4只债券违约 违约主体均为民营企业
Sogou: Rare! All four bonds defaulted in a day are mainly private enterprises
On July 15, a total of 4 bonds defaulted, which is rare. They are "15 Zhongcheng MTN001" of Zhongcheng City Construction, "18 Jinggong SCP003" of Jinggong Group, "17 Shengtong MTN001" of Shengtong Group and "17 Kangdexin MTN002" of Kangdexin. Among them, Jinggong Group is the new default subject since the second half of 2019. All the above 4 enterprises are private enterprises, and 2 are chemical industry.

According to the announcement of Shanghai clearing house, a total of 4 bonds defaulted on July 15. jinggong group co., ltd.' s "18 jinggong SCP003" failed to pay the principal and interest on time, which was also the company's first default bond. The failure of China city construction holding group co., ltd.' s 1.8 billion yuan middle ticket "15 middle city construction MTN001" to pay interest on time constitutes a material breach of contract. Shandong shengtong group co., ltd. was unable to pay interest on "17 shengtong MTN001" on time due to the reorganization process, and the "17 kangdexin MTN002" of kangdexin composite material group co., ltd. also failed to pay interest on time, resulting in a breach of contract.

It is worth noting that the main bodies that defaulted yesterday were all private enterprises, some of which were once the leaders of local private enterprises. The industry is still concentrated in chemical industry. Lu Wen Zhuo Li once mentioned in the medium-term bond market outlook that the interest spread of real estate, chemical industry and non-bank finance industries has widened obviously since June, while the credit interest spread of private enterprises has increased obviously. In the second half of the year, we still need to pay close attention to the continuous exposure of credit risks.


  Jinggong Group's First Bond Default

Jinggong Group is the new default entity since the second half of 2019. Its ultra-short financing bond "18 Jinggong SCP003" failed to repay the principal and interest of RMB 1.05 billion on schedule yesterday.

As for the reasons for the default, Dagong International said in its rating report that Jinggong Group has been experiencing liquidity shortage since January 2019. As of April 17, Jinggong Group's headquarters had outstanding interest of 528,200 yuan, outstanding interest loans of 245 million yuan, bank acceptance drafts of interest, letters of credit of interest and advances of interest. A total of 535 million yuan in settled advances, including 26 settled loans of interest, 1 discount of bills of interest and 1 letter of credit of interest. The balance of external guarantees totaled 3.922 billion yuan, of which the balance of non-performing and concern categories was 481 million yuan.

Dagong International has lowered its main credit rating to AA-. In addition, Dagong also said that "18 Merits SCP004" did not have a clear source of debt repayment. Lu Wen Li Zhuo noticed that there was only one month before the next interest payment date of the bond, August 16, and there was uncertainty about whether the bond could be repaid.

Jinggong Group said that it is actively raising funds through various channels and strengthening its own operations to ensure the repayment of subsequent debts when they fall due.

According to public information, Jinggong Group is a large private enterprise in Zhejiang Province, one of China's top 500 enterprises, with three listed companies.Seiko steel structure(2.890, -0.12, -3.99%)、Kuaijishan(8.710, -0.09, -1.02%)、Refined science and technology(5.050, -0.14, -2.70%). However, in May this year, the company issued a public notice stating that due to the liability for guaranteed debts, all shares held by listed companies were frozen by the judiciary and waiting to be frozen for a period of three years.

So far Jinggong Group has not released its 2018 annual financial report.

Subject in breach of contract

Shengtong Group, Kangdexin and Zhongchengjian are all the subsequent bond defaults of the defaulting subjects. In the announcement, Shengtong Group said that the company had entered the reorganization process in March this year, so "17 Shengtong MTN001" could not repay the interest as scheduled.

According to wind information, "17 shengtong MTN001" issued a total of 500 million yuan, with an issue period of 3 years and an interest rate of 6.76% on the bonds of this interest-bearing period. currently, shengtong group's main body is rated c and the bonds of this period are rated c.

Shengtong Group said that it would continue to carry out follow-up work in accordance with the Bankruptcy Law, and at the same time continue to do a good job in information disclosure obligations.

Contex has already defaulted on four of its bonds. Yesterday, it issued a "17 Contex MTN002 Default Announcement" as well as a semi-annual performance forecast for 2019. Net profit is still a loss, ranging from 536 million yuan to 765 million yuan. But the company still has about 2.33 billion yuan of debt to pay in the next three years.

China Urban Construction has also defaulted on several bonds. This default bond "15 Zhongcheng MTN001" issued a total of 1.8 billion yuan, with the interest rate of 4.93% for this interest-bearing period. At present, the principal rating of Zhongcheng is C and the debt rating is C ..


As for the reason why the current bond fails to pay interest on time and in full, China Urban Construction said that the company's financing channels were limited due to disputes over controlling shares, which led to a very tight capital chain. According to public information, China Urban Construction is currently facing a number of debt lawsuits, and a number of financial institutions have issued rulings on the debt lawsuits and applications of China Urban Group, including Bank of Communications International Trust, Shanghai Agricultural Commercial Bank, China Shipping Trust,China life(30.130, -0.55, -1.79%)Insurance,Shanghai bank(8.850, 0.01, 0.11%)Beijing Agricultural Commercial Bank, Contractor Bank, Jiangsu Trust, etc.

China Urban Construction said that the company would continue to communicate with shareholders and raise debt service funds by means including but not limited to shareholder loans and asset disposal. At the same time, the company is also seeking to voluntarily sell some of its assets for debt repayment in accordance with legal procedures.

According to the "national business daily" report, the Beijing No.2 Intermediate People's Court will auction nearly 465 million shares of Hebei Bank, accounting for 7.75% of the total share capital of Hebei Bank, and the auctioneer is Zhongcheng Construction. (End)

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Negative Social Mood Everywhere You Look

Notable is that the article dates the trend towards ugly in the mid-1990s, right before the social mood peak in 2000. That's also when the Scream franchise heralded the coming horror wave of the 2000s and 2010s.
CNBC: Ugly is in: How Crocs have taken over teen footwear, and sent the stock soaring
Crocs is the 13th most popular footwear brand among average-income female teenagers, according to Piper Jaffray’s spring survey. It grew from 30th in 2017, although last year it was ranked 12th.

...Teenagers agree that the shoe’s popularity shows no sign of stopping. But that doesn’t mean its reputation of being ugly has faded.

...Julianna, a 17-year-old from Teaneck, New Jersey who requested only her first name to be used, said that many of her friends are wearing Crocs precisely because they’re seen as ugly.

“People want to wear it ’cause it’s gross. It’s like rebelling against whatever society thinks is wrong,” she said. “I always thought they were ugly, but then everyone started wearing them and it just became a trend. Everyone I know has at least one pair.”
Orthodox socionomic theory says the stock market is the best reflector of mood that we've got. My thesis is central banks broke the market signal. (It could also be that stock markets are no longer central enough to serve as an indicator, in which case they might be an accurate signal of what is now a subculture of stock investors.) The past 20 years look like the 1970s and 1930s on steroids. The 70s saw a rise in androgyny, more widespread and flamboyant than the 1930s thanks to the sexual revolution. To find a similar wave of transgenderism though, one must look to Weimar Germany, a society in collapse. Other disturbingly similar trends are the rise of prostitution then, and the rise of young women selling themselves online to "sugar daddies" today. (See: "Sugar Daddy" Business Thrives As More Co-Eds Sign Up To Pay Off Student Debt). I believe the financial markets will eventually catch down to social mood, rather than vice versa.

2019-07-14

CTRL-P June Generates Stat Bump

China boosted credit growth in June and it came with a bump in economic activity. I don't want to downplay a bump in many stats, but I do not expect it will last. Moreover several subcategories I've been watching deteriorated.

Looking under the hood of a bump to 6.3 percent industrial production growth in June, industrial robots declined 11 percent, more than the 10.1 percent YTD. Autos down, but steel, coal way up.

NBS: 2019年6月份规模以上工业增加值增长6.3%

NBS 70 City Housing Survey
New home prices rose 0.66 percent and the number of rising cities fell to 63.
Existing home prices rose 0.28 percent, number of rising cities was only 45.

Shenzhen Stopped Reporting Avg Home Sale Price, Analysts Speculate Price Limits Could End

Chinese media are speculating Shenzhen's decision to stop reporting average transaction price may be the first step towards ending price limits.

iFeng: 深圳不再“官宣”楼市均价!放开限价前奏?
Sogou: Shenzhen no longer "publicizes" average housing prices! Prelude to Ending Price Limit?
Recently, the news that Shenzhen no longer publishes the average transaction price of the official real estate market triggered a heated discussion in the market.

In fact, since April this year, Shenzhen Real Estate Information Platform no longer publishes the average transaction price and total transaction amount of new houses, as well as specific information such as the average transaction price and total transaction amount published by area interval classification.

What other information "disappeared" with the official average transaction price? Why is the relevant data no longer published? What is the impact on home buyers? Zhongzheng jun will take you to popularize science.

Shenzhen No longer Announces Official Average Transaction Price

Previously, the daily and monthly average transaction prices of new and second-hand houses, transaction amounts and other real estate market data released by Shenzhen Real Estate Information Platform, as the only real estate transaction data released by Shenzhen authorities, have attracted much attention from the market.

However, according to media reports, after Shenzhen's institutional reform in April this year, the portal of Shenzhen's real estate information platform was changed from the former official website of Shenzhen Municipal Planning and Land Commission to the official website of Shenzhen Municipal Housing and Construction Bureau. Since then, the platform no longer publishes specific information such as the average transaction price and total transaction amount of new houses, as well as the average transaction price and total transaction amount published by area interval classification.

The data published on the brand-new Shenzhen real estate information platform only include the number of units sold, the area sold, the number of units available for sale, the area available for sale, and the "one house, one price" policy. Second-hand housing only announced the number and size of transactions, the transaction price has not yet been announced.

Shenzhen Housing and Construction Bureau Response

Due to the limited scale of Shenzhen's real estate market, the transaction price level is vulnerable to structural influences, and direct publicity of relevant price information cannot well reflect the real situation of the market. According to the requirements of macro-control of real estate in Shenzhen, in order to more accurately reflect the operation of the real estate market and referring to the practices of other sister cities, Shenzhen Housing and Construction Bureau will no longer publish the summarized transaction amount and average price information on the basis of making public the "one house, one price" price of the real estate pre-sale project. The relevant market conditions shall be subject to the real estate price index published monthly by the National Bureau of Statistics.

At the same time, Shenzhen Housing and Construction Bureau said that the first-hand pre-sale information of residential units is based on the reference data generated by real estate pre-sale surveying and mapping, and cannot be completely consistent with the delivery situation in practice. In order to avoid misleading property buyers, after research, the Bureau no longer publicizes the relevant information of residential units, and the actual survey of residential units shall prevail. The above adjustment is to better reflect the overall situation of Shenzhen's real estate market and is an integral part of real estate macro-control measures. At the same time, Shenzhen Housing and Construction Bureau will also release relevant information in due course according to the actual situation of market operation.

Price limit policy may be withdrawn

Li Yujia, chief researcher of Guangdong Housing Policy Research Center, pointed out that along with the "disappearance" of housing prices, there are also apartment type information generated by surveying and mapping during the pre-sale of new houses. In the future, the size and size of suites will be subject to the actual survey after the house is delivered.

As a result, the market cannot calculate the monthly average transaction price of new houses and the simple average price in different areas and regions. In the future, the only way to know Shenzhen's commodity housing prices is the monthly housing price index released by the National Bureau of Statistics, including the same month-on-month changes in new and second-hand housing.

Zhang Dawei, chief analyst of Centaline Real Estate, said that there are some problems in the price data of China's real estate market. Private organizations release data at will. Official data are missing. Real estate regulation relies on average prices. However, for first-and second-tier cities, average market prices are becoming less and less meaningful.

"At present, Shenzhen's new house transaction area is about 3-4 million square meters per year, accounting for only 35% of the total residential transaction area. Taking into account the supply of "similar housing" such as business apartments and talent housing, the proportion of new house transactions is even lower. Therefore, just like the official explanation, if a small number of new houses with high unit prices and large sizes enter the market, the average price of new houses will be easily pushed up. " Li Yujia pointed out that the supply of new houses has shown two characteristics in recent years, one is that the overall price has started to rise, and the other is that the high-priced and low-priced prices are divided into two levels.

"The overall average price of new houses has gone up, mainly due to the frequent occurrence of" land kings "from 2016 to 2017, which has raised the overall land price level to a new level." Li Yujia added that since 2018, the overall land price level has remained high despite the normalization of "land price limit" and the reduction of "land king" and land premium rate. In addition, the cost of urban renewal is getting higher and higher, resulting in the trend of "luxury" of new houses. In addition, Shenzhen's new low-priced apartments are concentrated in the peripheral areas such as Longgang, Pingshan and Guangming, while the main urban areas such as Nanshan are basically high-priced areas. The "polarization" of new home prices is obvious, resulting in poor supply homogeneity.

Li Yujia pointed out that at present, "stable expectation" has risen to the level of control strategy, and objectively more representative indicators that can accurately reflect the price trend are needed. The house price index calculated based on the principle of "homogeneity and comparability" (same quality, same area, same house type) eliminates the heterogeneity of houses, better reflects the overall market trend, and is also a general rule for global house price disclosure. Therefore, the house price index published by the National Bureau of Statistics, based on the general rules of international house price statistics and taking into account the influence of smooth heterogeneity, can better reflect the trend of house price changes.

At the same time, Li Yujia said that Shenzhen will no longer announce the price of new houses, and there is still a hidden problem, that is, since October 2016, the goal of controlling the price stability of new houses has become increasingly difficult to support. Since 2016, land prices have risen, and peripheral house prices are also rising, objectively pushing up house prices. The simple average price can be maintained at the level of October 2016 by delaying the entry of high-priced prices and "matching high with low prices". However, when the actual average price of new houses is getting higher and higher, there are few absolute low prices, and the promise to maintain a simple average price is becoming more and more fragile.

What is the significance of no longer "the average official price"?

Li Yujia pointed out that Shenzhen will no longer disclose the average price of new houses as the first step. In the future, with the establishment of a long-term mechanism, the price limit policy may be withdrawn. "Of course, this does not mean that house prices can rise at will in the short and medium term, but the local government's independent decision-making and regulation based on the main responsibility and the' one city, one policy' after defining the target of the fluctuation range. Similar to Shenzhen, 60% of the supply of new houses in the future will be subsidized housing and talent housing. If this part of supply can be guaranteed through the allocation of each plot, the price will be moderately liberalized. " . Li Yujia said.

"Brother City" had similar operations

It is worth noting that in July 2018, the real estate transaction data inquiry platform "sunshine home margin network", sponsored by Guangzhou housing construction Committee, also saw a similar situation, i.e. no information on the average sales price of the project.

According to media reports, the original number of units sold, area sold, check-out units, accumulated number of units sold, area, average price, unsold units, area and other data on Sunshine Home Margin Online have not been displayed normally since July 11 last year.

Subsequently, Guangzhou Housing and Urban-Rural Construction Committee responded that due to the partial data and information previously published daily on Guangzhou's "Sunshine Home Margin" website, it is easy to be unilaterally interpreted and hyped, which is not conducive to stabilizing the real estate market expectations. In order to further standardize the management of real estate information release and enhance the authority of information release and data interpretation, the release form of Guangzhou real estate market information is now adjusted to regular release and interpretation. At the same time, Guangzhou's propaganda, internet, housing, industry and commerce, public security and other departments will intensify their joint efforts to create a good atmosphere of public opinion and promote the smooth and healthy development of Guangzhou's real estate market.

2019-07-13

Crackdown: CIRC "Interviews" Real Estate Trusts, Some Suspend Business in Q3

财新:独家|22家信托公司被约谈 地产业务走向何方
A number of senior trustees told Caixin reporters that under the general requirements of supervision, the real estate business of the trust companies currently being interviewed is mainly rectified in three aspects: controlling the growth rate of real estate trusts, prohibiting “pre-finance” business, and channel. Business needs to be filed for approval.

...There were a total of 22 trust companies that were supervised in this round.

  According to Caixin reporters from a number of trust businesses, the 10 companies interviewed by the China Insurance Regulatory Commission are Zhongrong Trust , AVIC Trust , Industrial International Trust , Bank of Communications International Trust , Everbright Trust , Minmetals Trust , and Barry Trust . Jiangsu Trust , universal Trust , national communications care ; 12 interviewees Beijing Insurance Regulatory Bureau silver company CITIC Trust , China Credit Trust , foreign trade Trust , great Britain and trust , COFCO Trust , Huaxin Xin care , livelihood trust , Jingu Xin care , SDIC Taikang Trust and so on.
Regulators are cracking down on pre-financing that gets the ball rolling for development projects:
In recent years, several trust companies in Beijing, such as CITIC Trust and China Credit Trust, have used the model of specific asset income rights to do a lot for real estate developers. business. This model mainly uses the trust funds in two phases. In the early stage, it invests in the equity rights of specific assets such as the equity income of the project company. After the funds are collected, it helps the real estate enterprises to obtain the land certificates and then invests in the development and operation projects.

  These “pre-funding” businesses are often active collection management trust plans, which are subscribed by qualified investors. According to Caixin reporters, from the informed sources, under the guidance of the supervision window, the “pre-finished” collective trust plan that has not been filed has been directly suspended; the offenders are costly and will be subject to regulatory penalties.

  Since the procedures of the trust plan are to be filed after successful recruitment, some trust companies have to process the trust plan that is being raised and has not been successfully filed. According to the Caixin reporter, Everbright Trust, CITIC Trust and SDIC Taikang Trust have all removed some products. Among them, a CITIC Trust product sold by China Merchants Bank and a product of SDIC Taikang Trust were suspended for refund.

  A middle-ranking bank involved in the matter told Caixin reporter that the trust products that are generally raising funds have been negotiated with real estate companies. Now they are required to refund, which will directly affect the financing of housing enterprises. Although regulation does not take a “one size fits all” approach to real estate trusts, it will trigger a chain reaction of financial institutions, which is worth noting.

  As Zhou Chuangnan, an analyst at Huachuang Securities , pointed out, although the proportion of trusts in real estate investment sources is not high, the importance of trust financing in the real estate sector is significant. The key point is that the real estate is highly leveraged. The key role of trust in front-end financing.

China Trade Balance: Not Trade War, Dollar Shortage

Solve for the dollar, not trade war. It's a convenient smokescreen and a fortuitous coincidence that China can claim falling imports is related to trade war, assuming President Trump has a high time preference (the 2020 election). Otherwise, if enough time passes, it will be obvious to all what the drop in imports really signals.
SCMP: China’s exports and imports both fell in June, as higher US trade war tariffs blitz Chinese economy
In June, exports fell by 1.3 per cent year-on-year to US$212.8 billion, after tariffs on US$200 billion of Chinese goods were raised from 10 per cent to 25 per cent by Washington in May. This was down from 1.1 per cent growth in May.

Imports, meanwhile, continued to slump, falling 7.3 per cent in June to US$161.8 billion, according to data published by General Administration of Customs in China on Friday. This followed a 8.5 per cent decline in May.
Exports performed slightly better than economists polled by Bloomberg, who had forecast a 1.7 per cent drop, while imports were lower, with the poll predicting a 4.6 per cent drop.
Meanwhile People's Daily is crowing about consumption growth that seemingly avoids imports.

iFeng: 人民日报谈当前消费形势:“购物车”有力拉动“基本盘”
Sogou: People's Daily Talks about Current Consumption Situation: "Shopping Cart" Strongly Pulls "Basic Plate"
Consumption growth momentum is abundant, consumption upgrading features are obvious, and urban and rural consumption is more balanced.

"buy buy Buy"! One by one the fiery lens, refracts the consumption strong growth gratifying situation. China's big market is full of vitality, power and potential.

-Consumption growth has plenty of momentum.

Consumption has been the first driving force for China's economic growth for five consecutive years, and it has maintained a good momentum this year. From January to May, retail sales of social consumer goods totaled 161.332 billion yuan, up 8.1% year-on-year. In the first quarter, the growth of final consumer spending contributed 65.1% to economic growth. Under the background of increasing economic downward pressure, this is undoubtedly an exciting bright color.

-Consumption upgrading has obvious characteristics.

Residents' income growth has been outpacing GDP in successive years. Last year, the Engel's coefficient (the proportion of total food expenditure to total personal consumption expenditure) of residents across the country has dropped to 28.4%, and the escalation of consumption follows.

More people pursue new consumption.

"Once upon a time, what you ate and now what you eat is delicious." Feng Li in Nanjing, Jiangsu Province, has become accustomed to buying vegetables and ordering meals with mobile phone APP. "The goods have been delivered before leaving work. Fruit, vegetable and egg milk are very complete and affordable. " At present, there are more than 4,000 domestic fresh e-commerce platforms and "happiness on the tip of the tongue" pervades the streets.

"I rest, it labor. A thousand dollars is worth it! " Geng Miaomiao of Beijing said that the sweeping robot had made her happy. Condensing wall-mounted boilers, sleep-assisting lifting beds, automatic dryers ... Intelligent products are very popular. During this year's "June 18" shopping festival, sales of smart locks on an e-commerce platform increased 454% year-on-year, Bluetooth headsets increased 1516% year-on-year, and car refrigerators increased 78% year-on-year.

More people favor service consumption.

Whenever night falls, from cinemas to gymnasiums, from book bars, Internet cafes to bars, lights are bright and crowded everywhere. On the basis of income growth, people's pursuit of a better life naturally extends to all kinds of service consumption. Last year, service consumption accounted for 49.5% of residents' consumption expenditure.

From traditional consumption to emerging consumption, from commodity consumption to service consumption, consumer demand is upgrading from imitation, following the trend, simplification to differentiation, personalization and diversification.

-more balanced consumption between urban and rural areas.

Zhang Jijia of Nancun Town, Nanjie Village, pingdu city City, Shandong Province, counted the "big pieces" he had bought over the past few years with his fingers: "Smart phones were replaced, custom furniture was installed, and cars were bought."

From January to May, the retail sales of rural consumer goods nationwide reached 233.67 billion yuan, up 8.9% year-on-year, 0.9 percentage point higher than that of urban consumer goods. Li Guoxiang, a researcher at the Institute of Rural Development of the Chinese Academy of Social Sciences, believes that with the acceleration of rural residents' income growth and the continuous improvement of rural infrastructure and public services, the gradual upgrading of rural residents' consumption is becoming an important force to stimulate domestic demand.

Changes in the external environment have not resulted in a shortage of related imported goods and a sharp rise in prices.

Both the statistical data and the e-commerce promotion observation window strongly prove that China's consumption is growing steadily and the pace of consumption upgrading is accelerating. However, as protectionism and unilateralism continue to spread and uncertainty in the international market increases, some people are also worried about whether consumption can maintain a good momentum.

Some people worry that there will be a shortage in the supply of related imported goods. "Such worries are totally unnecessary." Professor Wang Xiaosong from Renmin University of China School of Economics said.

On the one hand, China has a series of import expansion policies to encourage trading partners to supply more high quality and low price commodities. At present, China has lowered tariffs on a variety of imported goods that involve consumers' daily lives. Red wine from Georgia and Chile, durian and pitaya from ASEAN, salmon from Iceland and other products have achieved zero tariffs. The number of "foreign brands" in the service industry has also increased significantly. United Family, Artemont and other high-end hospitals have successively opened in Shanghai, and Rosen Convenience Store has opened more than 2,000 stores in China.

On the other hand, the "the belt and road initiative" initiative has expanded the "circle of friends" and will attract more new international suppliers. According to statistics, during the "June 18 shopping festival", the overall turnover of Tmall international overseas brands increased 197% year on year. According to the breakdown data, Japan, the United States, South Korea, Australia, Germany, France, the United Kingdom, Spain, New Zealand, the Netherlands and other countries ranked among the top ten in turnover. Austria, Russia and Vietnam led the year-on-year growth in transactions.

Others are worried that the prices of related imported goods will rise sharply. "Judging from the classified consumption data in the first May of this year, changes in the external environment have not caused a sharp rise in the prices of related imported commodities or a contraction in transactions." Wang Xiaosong said.

This is because domestic consumers are often "insensitive" to price increases of such commodities. Affected by changes in the international economic and trade situation, most of the imported basic living and consumption upgrading commodities belong to higher-end products. Domestic middle-income and high-income earners often "don't care much about and can afford" their price changes, while middle-income and low-income earners generally buy relatively little, so the overall impact is limited.

The feelings of Gu Xinfeng, a post-80s white collar worker in Suzhou City, Jiangsu Province, and his lover Xiao Xialing confirm this judgment. They have higher incomes and often buy imported food from cross-border e-commerce platforms or offline boutique shopping centers. "My favorite lobster, her favorite blueberries, nuts and chocolates have all increased in price this year, but they have not reached the point where we feel distressed. Should we buy or not?" Gu Xinfeng said.

This is also because related imported goods are often more substitutable. Imports affected by changes in the international economic and trade situation are mainly automobiles, agriculture, forestry, animal husbandry and fishery products, with relatively narrow distribution areas, and most of them can be imported from other trading partners, thus not leading to a general price increase.

"In the first quarter, China's overall import price index rose by only 1.2% on average from last August, far lower than the net profit growth rate of circulation enterprises and the real income growth rate of residents." Gao Lingyun, a researcher at the World Economic and Political Research Institute of the Chinese Academy of Social Sciences, said.

There is great potential and many favorable conditions for maintaining stable consumption growth.

Looking ahead, the huge market with a population of nearly 1.4 billion and the strong purchasing power of more than 400 million middle-income groups are incomparable to any other country. They will become the most reliable guarantee for the sustainable development of China's consumer market and provide the source of growth and vitality for China's economy and even the world economy. "Although China's consumption contributes a relatively high proportion to economic growth, the consumption rate, that is, the proportion of final consumption in GDP, is just over 50%, and compared with the consumption rate of 80%-90% in developed countries such as Europe and the United States, China's consumption growth still has much room for improvement." Zhao Ping, director of the International Trade Research Department of the China Council for the Promotion of International Trade Research Institute, said.

There is great potential to maintain stable growth in consumption, and there are many favorable conditions. Policy dividends are being released continuously.

The "pocketbooks" are getting bigger and bigger and will continuously improve the people's consumption ability.

Income is increasing. The number of new jobs in cities and towns in China has remained above 13 million for six consecutive years. In the first quarter, the per capita disposable income of the whole country increased by 6.8% year on year, while the income of rural residents grew faster than that of urban residents. At present, there are about 140 million three-member families with annual incomes ranging from 100,000 yuan to 500,000 yuan, and the scale continues to expand.

The burden is decreasing. "Individual income tax has been paid more than 80% less!" Zhao Jia, an employee of Shandong Wansheng Communication Industry Co., Ltd., said that his monthly personal income tax had dropped from 1,870 yuan to 350 yuan compared with before October 1 last year. "In the future, my daughter-in-law will have the money to run fitness cards and my parents to travel!" A research report by Peking University shows that the personal tax reform will eventually expand consumer spending by 717.6 billion yuan, which will boost China's economic growth by 0.87 percentage points based on 2017 GDP.

-The safety net for the people's livelihood will be stronger and the worries of the people will be continuously reduced.

Pension standards have been rising for 15 years, basic medical insurance covers more than 1.3 billion people, and the reimbursement rate for serious illness medical insurance has been raised again … "Social security is getting thicker and thicker, which is conducive to improving consumption expectations and stimulating immediate consumption." Hu Yijian, president of the Institute of Public Policy and Governance of Shanghai University of Finance and Economics, said.

-Continued deepening of structural reforms on the supply side will enrich people's consumption choices.

Policy support is strong and effective supply is increased. Recently, ten departments jointly issued a document encouraging the society to run medical services to further meet the diversified and multi-level medical needs of residents. Speed up telecommunication service and reduce charges; Domestic service quality improvement and expansion ... Policy "big gift bags" are coming one after another, and residents "small wallets" are eager to try.

New industries and new formats are booming, giving rise to more consumption hotspots. With the upgrading of "Made in China" to "Made in China with Wisdom", there are more and more "explosions" of domestic products and more "fans". "internet plus" promotes the integration of online and offline consumption, making choices increasingly convenient and consumption everywhere. "The market size of the artificial intelligence industry in 2023 is expected to increase nearly 6 times compared with 2018" and "the new retail market size is expected to reach 1.8 trillion yuan in 2022." Industry research papers have drawn exciting new hot spots and new spaces for consumption growth.

-Improving and purifying the consumption environment will continuously enhance the people's willingness to consume.

On the supply side, we will focus on cracking down on the chaos of health care products, implement full coverage and strict supervision of vaccines, drugs, etc., and fully launch the tourism supervision service platform throughout the country ... China will speed up the establishment and improvement of a high-level, wide coverage and strong restriction quality standard system to ensure consumers' rights protection capability. "Sincerely invite people from all over the world, and honor comes from the letter." More and more enterprises are making great efforts to improve quality and service.

On the demand side, we will speed up the improvement of the credit system, accelerate credit consumption, and expand more consumer loans to cultural, educational and pension services.

Under the effect of the "combination fist" of the consumption policy, China's consumption will still maintain a steady growth this year. A recent report released by the China Business Association and the All-China Business Information Center estimated that the growth rate of the consumer goods market in 2019 will be around 8.5%, basically the same as that of the previous year. Wang Bin, deputy director of the Department of Market Operations of the Ministry of Commerce, said that according to the prediction of relevant research institutions, the total retail sales of social consumer goods will increase by 9% in 2019, and its contribution rate to economic growth will reach 65%, which is expected to continue to be the first engine of economic growth.

To promote the formation of a strong domestic market, to further stimulate the momentum of consumption growth, and to strive to make people eat at ease, dress well and use comfortably. The "shopping cart" of hundreds of millions of Chinese consumers will definitely be able to effectively drive the "basic plate" of China's economy.

2019-07-12

Equities and Social Mood Have Never Been This Out of Whack

Comedies are disappearing as social mood sinks. You might sell me on Hollywood being in a major funk because they're extremist left-wingers who think Trump's election is the apocalypse, if only the popularity of horror movies wasn't still rising after 20 years.

Philadelphia Inquirer: Don’t laugh: Movie comedies are disappearing
I have my eye on something that to me is more troubling: I refer to the recent plummeting share of movie dollars that people spend on comedies, because Hollywood isn’t making them, or because America is in a bad mood, or both.

...The Hollywood Reporter recently ran a numbers crunch revealing that comedies last year accounted for an appalling 8 percent of box-office revenue.

Now, some of this is a statistical sleight of hand. All superhero movies get dumped in the superhero-genre pile, even though Guardians of the Galaxy and Thor: Ragnarok are quite clearly comedies. Ditto the Deadpool movies, which exist to satirize superhero movies, and thank God because it reflects the (former?) American impulse to make fun of the grandiose and the self-important. Woe to any culture that loses the will to make those kind of jokes, or the capacity to laugh at them.

...To get a sense of this decline, let’s run things back 20 years to 1998 for a full-year comparison. You’ll find a diverse array of comedies in the top 15: There’s Something About Mary, The Nutty Professor, Rush Hour, You’ve Got Mail, The Truman Show, Patch Adams, even The Waterboy. Way down ballot you had The Big Lebowski and Rushmore.
Social mood is extremely negative. Maybe mood is "wrong" and will catch up with equities. Or maybe stocks are wrong and will catch down to mood. I don't discount the chance that I'm wrong, but I do not see a sudden rise in mood coming.
But even classic stand-ups like Seinfeld have found themselves defending their craft recently on the heels of the groundbreaking Hannah Gadsby Netflix special, Nanette, that served to deconstruct classic stand-up as a paternal and oppressive institution that too often punches down on the marginalized. (Though this would seem to “erase,” as the kids say, the contributions of women going back to Grace Allen, Moms Mabley, and beyond).

Her special led to a broader critical discussion of the uses of comedy, including the argument that formulaic jokes “can’t really challenge or change anything, and are therefore more conservative than progressive” and not especially useful in "describing the totality of the human experience.”

Here you can feel comedy being dragged into the same politicized, polarized morass that has made so much of contemporary culture dull and dreary, and reduces what has traditionally been the comedy-loving American citizenry into a churlish electorate, formed of grumpy constituencies.
The major cities, the tech sector, the entertainment sector, finance, these are some of the big winners from the economy over the past 20 years, and yet they are pumping out anti-comedic comedy. It's not Trump. He exacerbated a trend, but he didn't cause it. They should be laughing at Trump as they did Bush, but it should be even funnier because the gap between wealth and success is much wider than in the early 2000s.

Perhaps its because they're seeing the scenes of homelessness and despair on their streets, but then that goes back to the point of negative mood and equities being out of step with reality. Things aren't going well for the man on the street, the working joe, the average family. People are stressed out and anxious. They're eschewing comedy for horror. If this trend doesn't reverse, eventually the terror will reach Wall Street.

Carl Walter with Jim Grant

Sounding Line: Carl Walter: China Will Never Open Its Capital Markets
“(Baoshang) is scaring everybody because they’re not the only one. They’re the one that couldn’t hold it together in the end, but… I’ve been trying… to figure out how many banks there are in China and supposedly there are 134 of these city commercial banks. 134 of which (Baoshang) is one, and all of these guys use wealth management products or borrowed in the inter-bank market to fund local things. Or, they borrowed in the inter-bank market or borrowed in wealth management products to support local asset management companies to hide other banks’ bad loans. I don’t think (Baoshang) is unique and I think the reason the markets are scared is because everybody knows that the emperor has no clothes. There is a lot more than just the one.”

“…The main point is that the People’s Bank had gotten their way and opened on all these things. They liberalized the interest rates, so you got wealth management products… You saw what happened when the capital account opened up and they closed it again. There is no way in the world things like that are going to happen (again) in China in your lifetime, my lifetime, or anybody’s lifetime as long as the Party’s in control. No way…”

China Credit Growth Stabilizing, Currency Devaluation Coming

China M2 growth was 1.60 percent in June 2019 vs 1.56 percent in June 2018. The 3-month rate of growth slowed from 7.1 percent in June 2018 to 6.9 percent in June 2019.

If M2 were to grow at this pace over the next year and reserves and the yuan stay stable at current levels, the reserve coverage of M2 would fall below 10 percent in 2020.

ING: China: Soaring loan growth is a worrying signal
Total financing increased by CNY2.26 trillion in June, with yuan loans increasing by CNY1.66 trillion.

Credit growth was exceptionally strong and this worries us. It means the Chinese economy needs a lot of funds to keep infrastructure investment growing at a level that can maintain GDP growth above 6% at a time when manufacturing PMIs and export growth are negative.

Bloomberg: China’s Tepid Growth Prompts Calls for Imminent Rate Revamp
China’s slowing economy and clogged policy transmission are adding to the urgency of a reform of the country’s interest rates in order to lower borrowing costs.

With the economy about to post the slowest pace in years, economists from Bank of China Ltd to Citigroup Inc and Everbright Securities expect the central bank to accelerate a long-mulled revamp to simplify the complex array of interest rates.
I must reiterate every time that this is ultimately a U.S. dollar story and if the dollar begins (or has begun) a bear market then the outlook changes. But right now, if China cannot growth the economy without more stimulus, directed investment and credit growth, risk of currency devaluation is rising quickly.

2019-07-11

China Crackdown on Real Estate Trusts Following Scandal

iFeng: 坚持“房住不炒” 银保监会严查房地产信托!
Sogou: Insist on "Housing Not to be Fired" Bank Insurance Regulatory Commission Closely Inspects Real Estate Trust!
It never rains but pours.

Recently, the whole real estate market has been greatly impacted. The main impact comes from Xincheng Holdings. The scandal of its chairman has caused the listed companies of "Xincheng Series", whether listed in Hong Kong or listed in A shares, to drop to a limit or even to fall off a cliff. The market value has evaporated by more than 40 billion yuan. People have great doubts about the continuation of the capital chain behind it.

China Banking Regulatory Commission Interviews Trust Companies

At the same time, China Banking Regulatory Commission began to interview trust companies, demanding that over-expanded trust companies restrict investment in real estate.

This background can actually last until last month. Guo Shuqing, chairman of the China Insurance Regulatory Commission, made a clear analysis of the real estate market at the Lujiazui meeting last month and drew two conclusions. One is that the debt of Chinese residents has reached an unsustainable level and the burden is heavy. Second, more than half of the new loans are now mortgages, which is also unsustainable, indicating that the financialization of real estate has become very serious.

In fact, the bank has already done layers of control, and has a certain degree of restriction on developers and mortgages. Therefore, in the end, everyone found a trust company to bypass the bank when looking for funds. As a result, the trust company's business in the past two years has mainly been mortgage loans or real estate development. At present, the CIRC will also control these fast-expanding trust companies for interviews and once again strengthen the wind control over the entire market.

The trust companies interviewed this time include Zhongrong Trust (the largest trust company in China), AVIC Trust, Jiangsu Province International Trust, Wanxiang Trust, Xingye Trust, Jiaoyin International Trust, Everbright Trust, Minmetals Trust, Berry Trust and Guotong Trust. Except Zhongrong Trust, other trust companies are professional trust companies or trust companies with relatively limited scale. The more such companies are, the more radical their business development in real estate tends to be.

Therefore, the CIRC has put forward five requirements for these trust companies: first, strictly implement the real estate market regulation policy and the current real estate trust supervision requirements; Second, improve the level of risk management and control to ensure that the scale and complexity of the business matches its own capital strength, asset management level and risk prevention and control capability. Third, raise the awareness of compliance, strengthen the construction of compliance and ensure the steady development of real estate trust business. Fourth, control the growth rate of real estate trust business and keep the growth rate and increment of real estate trust business at a reasonable level. Fifth, improve the entrusted management ability, actively optimize the real estate trust service mode, and provide professional and characteristic financial services for real estate enterprises. After all, the most important thing for these requirements is to control the growth rate of real estate trust.

Regulatory layer strictly controls risks and promotes development

Real estate trust, in fact, is a real estate fund trust, which refers to the act that the client entrusts the legally owned funds to the trust and investment company, and the trust and investment company invests the funds into the real estate industry and manages and disposes of them.

Real estate trust can not only bring benefits to clients, but also is one of the financing methods in China's real estate industry. Because China's real estate development funds are mainly self-raised funds and other funds, of which the deposit and advance payment account for the highest proportion, and the rest are mainly financed.

Real estate business is an important part of trust investment. From June 2018 to June this year, the monthly establishment scale of real estate trust has ranked first in collective trust for 13 consecutive months, becoming an important business for trust companies.

Judging from last year's data, although the overall scale of the trust industry is declining, the scale of real estate trust is rising against the trend. By the end of May, the balance of real estate trust assets was 3.15 trillion yuan, accounting for 14% of the total trust assets. An increase of 166.597 billion yuan over the beginning of the year, up 15.15% year on year.

In short, the real estate trust business is growing too fast, which has attracted the attention of the CIRC. For some trust companies that rely on real estate trust business, the performance pressure in the second half of the year will be greater. As for the real estate sector, the market generally expects that the financing environment for housing enterprises will be further tightened and the pressure on capital will be further increased. As far as the market is concerned, strong supervision is helpful to promote trust companies to return to their original sources, optimize their structure and transform. However, short-term pain in the market is inevitable.

Precious Metals Charts

A sampling, not exhaustive. Own a few of these, and many more not listed below.

2019-07-10

Real Estate Financing to Tighten Again

iFeng: 部分银行迎“窗口指导” 房企融资渠道再收紧
Sogou: Some banks tighten financing channels for housing enterprises in response to "window guidance"
"The regulatory authorities have given' window guidance' to some banks with large real estate loans and fast growth, demanding to control the amount of real estate loans, but the specific requirements for each bank are different." Mo Yichen (not his real name), a person related to a Shanghai city commercial bank, disclosed recently that the core idea of the above measures is to control the scale of real estate loans. Although it is not said that the relevant businesses will be completely frozen, all kinds of guidance and non-approval by the head office are emerging one after another. Banks that have seen their mortgage loans grow too fast may be affected.

On the other hand, on the 4th and 5th of July, the Ningbo Bureau of Bank and Insurance Supervision issued 39 fine tickets, imposing a total fine of 12.75 million yuan on more than 10 banks. Nearly 60% of the fine tickets were for irregularities in real estate mortgage loan management and imprudence in real estate credit business.

Analysts pointed out that the above measures may mean that the bank's real estate credit will also slow down following the suspension of some real estate trusts. This will be a test for developers with high debt ratio and not too much working capital on hand.

China Headed for Headline Deflation

Barring a sudden reversal, the PPI will fall below negative 1 percent by September or October.

How strong is deflation? The CPI fell 0.1 percent despite high food prices. That said, headline should come down as 12-month comparisons improve. Fresh fruits still ripping higher, up 5.1 percent in June alone. Vegetables fell 9.1 percent though, and egg prices dipped as well. The govt reports an overall 0.1 percent decline in food prices for June. A 3.5 percent decline in transportation fuel prices also helped pull the CPI below zero for June.

2019-07-05

Agricultural Bank Director in Hohhot Flees Corruption Charges

The banking system is sound.

iFeng: 农行处长外逃:有多套房产北京7套 9名大行员工被通缉
Sogou: Director of Agricultural Bank of China Flees: There are Several Houses, 7 Sets in Beijing and 9 Employees of Big Banks Wanted
Horrible! Head of Big Bank Manipulates 73 Bonds, Profits Over 200 Million in 3 Years! More properties were disposed of, 7 in Beijing and 2 in Sanya, and 9 employees of big banks were wanted by the Red

Manipulation of 73 bonds, illegal profits totaling 219 million yuan, flight for nearly six years, the director of the big bank suspected of corruption crime has made the latest progress.

Recently, the People's Court Announcement Network released the latest announcement of Hohhot Intermediate Court in Inner Mongolia Autonomous Region. The announcement shows that the Hohhot Municipal People's Procuratorate believes that there is evidence to prove that the suspect Bai Jing escaped after committing a corruption crime and could not come to the case after one year's wanted. The sealed-up property is highly likely to belong to illegal income and other property involved in the case, so it applies for confiscation of illegal income according to law.

Hohhot Municipal People's Procuratorate has applied for confiscation of 9 sets of real estate, of which 7 sets are located in Beijing and 2 sets are located in Sanya, Hainan. Bai Jing was placed on file for investigation by the Inner Mongolia Autonomous Region Public Security Bureau on September 9, 2013 on suspicion of committing the crime of official embezzlement. He was arrested with the approval of the Inner Mongolia Autonomous Region People's Procuratorate on November 18 of the same year. Bai Jing fled to Canada on July 31, 2013.

In 2015, INTERPOL's China National Central Bureau centrally released red notices for 100 suspected criminals who fled the country and were involved in important corruption cases. Bai Jing is one of the "100 red notices". In fact, the number of people involved in important corruption cases suspected of committing crimes in the financial sector is not very small, reaching 15, with the banking sector accounting for as many as 9.

Illegal Profits Over 200 Million in Three Years

Hohhot City Intermediate Court announced that Bai Jing, born in 1973, was the deputy director (presiding) and director of the local currency investment department of the Agricultural Bank's Financial Market Department Investment Center (Level II Department). From 2008 to 2011, criminal suspect Bai Jing used his position in Agricultural Bank to conspire with others to use Agricultural Bank and Guoxin Securities as bond trading platforms, manipulating 73 bonds successively for bond trading, embezzling the interests of Agricultural Bank and Guoxin Securities and illegally making a total of 219 million yuan.

On September 9, 2013, Bai Jing was placed on file for investigation by the Inner Mongolia Autonomous Region Public Security Bureau on suspicion of committing the crime of official embezzlement. On November 18 of the same year, he was arrested with the approval of the Inner Mongolia Autonomous Region People's Procuratorate. Bai Jing escaped on July 31, 2013, and INTERPOL issued a red notice to him on December 19 of the same year. After investigation, the Inner Mongolia Autonomous Region Public Security Department found out that Bai Jing was suspected of corruption. On February 22, 2019, the clues of the crime were transferred to the Inner Mongolia Autonomous Region Supervisory Committee. On February 28, 2019, the Inner Mongolia Autonomous Region Supervisory Committee filed an investigation on Bai Jing's suspected corruption.

The announcement said that suspect Bai Jing used part of the illegal proceeds to purchase several houses in Beijing and Sanya, and the Inner Mongolia Autonomous Region Supervisory Committee seized 9 houses according to law. The Hohhot Municipal People's Procuratorate believes that there is evidence to prove that the suspect Bai Jing escaped after committing a corruption crime and could not come to the case after one year's wanted. The above-mentioned sealed-up property is highly likely to belong to illegal income and other property involved in the case, so it applies for confiscation of illegal income.

It is worth noting that since Bai Jing is still in hiding, according to the law, close relatives of the suspect Bai Jing and other interested parties may apply to the court in writing or entrust an agent ad litem to participate in the proceedings during the announcement period. If a close relative of the criminal suspect applies to participate in the lawsuit, he shall provide proof of his relationship with the criminal suspect; Other interested parties who apply to participate in the litigation shall provide evidence of their rights to the property they apply for confiscation. If they fail to declare their rights according to regulations, they may bear adverse legal consequences. The announcement period is six months. After the announcement expires, the court will try the case according to law.

Nine properties will be confiscated, while seven in Beijing are worth a lot of money.

The announcement also announced the list of property confiscated by Hohhot People's Procuratorate, totaling 9 properties, including 7 in Beijing and 2 in Sanya, Hainan. Specifically:

1. One set of property located at Room 2102, Unit 1, Floor 21, Building 2, Yard 11, Yuyuantan South Road, Haidian District, Beijing;

2. One set of CD-07C property located on the 7th floor of Building 3, Yuyuantan Residential and Commercial Building, Haidian District, Beijing;

3. One property located atNo. V08, Mangrove Valley (Yalong Bay-Xishan Ferry) property hotel in Sanya City, Hainan Province;

4. One property located at Room 1702, Unit 1, Floor 17, Building 2, Yard 11, Yuyuantan South Road, Haidian District, Beijing;

5. One set of property located at Room 2108, Floor 18, Apartment 3, Hujialou (Phase I, Hujialou Commercial and Residential Complex), Chaoyang District, Beijing;

6. One set of property located at No.3823, Residential Building A1-7, Jiayuan, Longzhiwan, Shunyi District, Beijing (Floor 21, Tianzhu Development Zone);

7. One property located at No.5907, Residential Building C1-41, Jiayuan, Longzhiwan, Shunyi District, Beijing (Floor 21, Tianzhu Development Zone);

8. One set of property V09 located at Mangrove Valley (Yalong Bay-Xishuandu) property hotel in Sanya City, Hainan Province;

9. One property located at Room 1506, Floor 12, Apartment 1, Hujialou (Phase I, Hujialou Commercial and Residential Complex), Chaoyang District, Beijing.

The Chinese reporter from the securities firm inquired about these properties in Beijing from the chain house. Among them, the two properties located in No.11 Courtyard, Yuyuantan South Road, Haidian District are the high-end residential community Yuanxitang. At present, the average price in this community is over 98,000 per square meter. Judging from the historical transaction records published by Chain Store, most apartments are large ones with a transaction price of over 20 million yuan, ranging from 300 to 700 square meters.

In addition, the residential area where the two sets of Longzhiwan Jiayuan real estate in Shunyi District of Beijing are located is a villa area, and the average price is currently around 60,000, according to Lin Jia.

There are more than 10 "100 Hongtong personnel" in the financial field.

In 2015, INTERPOL's China National Central Bureau centrally released red notices for 100 suspected criminals who fled the country and were involved in important corruption cases. Bai Jing is one of the "100 red notices". In fact, not a small number of people involved in important corruption cases in the financial sector are included in the list, up to 15, including 9 in the banking sector.



It is worth mentioning that the above-mentioned nine wanted bank personnel are all from state-owned big banks, namely ICBC, BOC, ABC and BOC. Among them, Liu Changming, former party secretary and president of Guangzhou Branch of Bank of Communications, had the highest amount involved. According to public information, Liu Changming illegally issued nearly 9.8 billion yuan of loans during his three years in charge of Guangzhou Branch of BOCOM. At the end of 2007 and the beginning of 2008, BOCOM transferred Liu Changming to BOCOM International Trust and Investment Co., Ltd. in Wuhan in the name of cadre rotation. However, Liu Changming did not arrive in Wuhan to take up his new post. Shortly thereafter, BOCOM was unable to contact Liu Changming.

Zhu Zhenyu, a former staff member of the Sichuan Branch of Industrial and Commercial Bank of China, was successfully persuaded to return after fleeing for 13 years in 2015. Public reports show that from June to September 2002, Zhu Zhenyu, together with others, used the opportunity of handling personal housing mortgage loan business to fake customer information and repeatedly handle house purchase mortgage, embezzling more than 1.4 million yuan of public funds with others. In 2017, Yuan Mei, a former credit officer in the business department of Sichuan Branch of Industrial and Commercial Bank of China, returned home and surrendered.

In 2018, Lai Mingmin, former president of the Jiangmen Branch of the Bank of China, fled home 17 years later to surrender and voluntarily returned the stolen goods.

In June 2019, Liu baofeng, a "hundred hongtong personnel" who fled for 18 years and a former general manager of Shenzhen caitian road securities business department of huatai securities co., ltd., returned to China to surrender and actively return the stolen goods.

2019-07-03

30-Year Treasury Yield Drops Below Fed Funds Rate

Hengfeng Bank Falls Under Regulator Scrutiny, HQ Moved

Hengfeng is of the of banks that hasn't filed an annual report yet. back in early June, the bank's HQ has been moved from Qingdao to the provincial capital of Jinan where it could be more closely monitored by regulators.

Sina: 中国银保监会新闻发言人:恒丰银行总部已搬迁至济南
Sogou: Spokesperson for the China Banking Regulatory Commission: hengfeng bank Headquarters Moved to Jinan
On June 9, the website of the China Banking Regulatory Commission (CIRC) published a press spokesman for the CIRC to answer a reporter's question from the Financial Times. A spokesman for the China Banking Regulatory Commission revealed that at present, the headquarters in hengfeng bank has moved to Jinan.

In response, "It is understood that Shandong Province is carrying out reform and reorganization of hengfeng bank. How is the progress?" On this issue, a spokesman for the China Banking Regulatory Commission said, "According to the information we have, due to the investigation of cases, reform and reorganization, hengfeng bank has not disclosed its annual report to the public yet. The provincial government of the Shandong Provincial Committee attaches great importance to the comprehensive reform of hengfeng bank and is accelerating the relevant work. The overall reform idea has been agreed by all parties concerned and will be implemented as soon as possible. In the early days of hengfeng bank, the people involved are being investigated and dealt with according to law. "

A spokesman for the China Banking Regulatory Commission said at the same time, "At present, the headquarters of hengfeng bank has moved to Jinan, with sufficient liquidity and stable operation. The regulatory authorities will continue to guide hengfeng bank to strengthen risk prevention and control, strengthen compliance management, and maintain a steady and positive trend. "

Earlier, Jinan's official media revealed in January this year that as the only national joint-stock commercial bank headquartered in Shandong Province, hengfeng bank is expected to settle in Jinan.

On January 19, an article published on the front page of Jinan daily, "lixia is striving to be the leader in raising provincial capitals." it said: "in 2018, lixia district, guided by major projects to transform old and new kinetic energy, combined with the regional industrial foundation, will issue implementation opinions to accelerate the cultivation of 80 billion-level industries such as industrial finance, cultural creativity, modern commerce, scientific and technological services, big data and a new generation of information technology, medical and health care, trade circulation, and quality tourism, so as to promote the development and scale growth of leading industrial clusters.

"A financial ecosystem of industrial and financial cooperation is forming-the province's first financial enterprise alliance has been established; 18 new financial institutions; Hengfeng bank is expected to become the first national joint-stock commercial bank to settle in Jinan. "

Hengfeng bank Co., Ltd. is one of 12 national joint-stock commercial banks. Its predecessor was Yantai Housing Savings Bank established with the approval of the State Council and the People's Bank of China in 1987. In 2003, it was transformed into hengfeng bank Co., Ltd. with the approval of the People's Bank of China.

According to the official website of hengfeng bank, by the end of 2017, hengfeng bank had 16 tier-one branches and 2 branches directly under the Head Office in Qingdao, Jinan, Nanjing, Hangzhou, Chengdu, Chongqing, Yantai, Fuzhou, Kunming, Xi 'an, Ningbo, Beijing, Shanghai, Zhengzhou, Changsha, Wuhan and other places, with a total of 334 branches.

Lixia District is the leader of the economic and social development in Jinan, capital of Shandong Province. Currently, it is focusing on the two core industries of "finance+and" new headquarters economy ".It is committed to becoming the main carrier and main functional area for the provincial capital city to build a regional industrial financial center and a headquarters base in the north.

Long Cotton

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2019-07-01

South Korea on Edge

I was going to release this post later in the week, but seeing as the Kospi fell on Monday while the rest of the world's stock markets are rallying...

The bearish case for South Korea (stock market and currency): it is reliant on exports to China and the Chinese economy is in a cyclical slowdown, not a trade related blip. The prime macro asset here is the U.S. dollar. A China/global slowdown includes a stable/rising U.S. dollar. Given the position on the charts, one could take the other side of the argument. I believe the downside for $EWY exceeds the upside in a bullish scenario, there are likely better assets for those bearish on the dollar and bullish on emerging markets/China, but South Korea is still a great indicator.

Roughly half of South Korea's economy is exports and of that, more than one-quarter go to China.
Given the trading relationship, the won has been highly sensitive to the Chinese economy, but has become even more sensitive as speculators look for currencies that will suffer from a Chinese currency devaluation.
Reuters: South Korea's won is Asia's whipping boy in U.S.-China trade war
As trade tensions flared up between the world’s two largest economies last month and the Chinese yuan threatened to fall past the key 7-per-dollar level, the won slid to near 1,200 per dollar, its lowest since January 2017.

“The won is like a proxy currency to not only global growth sentiment but one that’s also related to U.S.-China trade talks,” said Park Sang-hyun, chief economist at Hi Investment & Securities in Seoul.

“It won’t be easy to keep the dollar/won level of 1,250 should the U.S.-China spat intensify, with possibly additional tariffs, for example.”
The won corrected along with the yuan and U.S. stocks in June, but all three remain in bull markets.
There's no end to the bull-bear debate over the U.S. dollar. One bearish case for the greenback is the Fed unleashes global quantitative easing and rescues the ECB, BOJ and PBoC. It goes from being "the cleanest dirty shirt in the laundry" to the dirtiest. Another dollar bearish scenario is the 10-year depression ends and inflationary growth returns. This could include stagflation in the developed economies, but primary industries (mining, agriculture, energy) are much larger portions of emerging market economies. They should see positive growth. Finally, the dollar has followed a roughly 18-year cycle going back to the 1980s, with roughly equal parts bull, bear and consolidation. The current bull market began in 2014 and would be likely to terminate over the next 12 to 18 months. It could dip and retrace back to current levels as it did in the early 2000s, but would not make a meaningful new high.

The charts also raise the possibility of an explosive (catastrophic for the global economy) dollar rally. If the Fed cuts rates, but the global central banks have to initiate extraordinary monetary policy because they have less room top cut (ECB,BOJ) or because their economies will suffer far greater losses in a recession (PBoC), the dollar should rally as it did in the early 2000s recession and during the 2008 financial crisis (yen being a potential outlier). Multi-year and multi-decade basing patterns are within striking distance even after the recent pullback in the dollar. The flipside of a dollar breakout would be inflationary pressure overseas as currencies devalue against the U.S. dollar. The extreme case is an echo of the 1930s when global currencies devalued versus gold. The country most similar to 1930s USA is China, but with more debt, less productive investment of that debt and worse demographics.

Along with the macro and currency case for South Korea, the South Korea ETF is at an important resistant level.
The China ETF is at a similar point.
There are only a handful of South Korea ADRs and even fewer with ample trading volume.