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.