Slower Growth and Andy Xie on Bailouts

Who Should Pay for Trusts that Go Bust?
While there are numerous trust companies, this industry could not have taken off without big banks entering the picture. In a few short years, the trust industry has risen from nothing to 10 trillion yuan in assets. The distribution power of big banks made this possible.

The banks became involved to increase income from fees. As their lending capacity became constrained by capital and sometimes government directive, they embraced trust products as the main off-balance-sheet vehicle to increase lending to their high-risk clients. These clients are usually willing to pay high fees. The banks could charge 4 to 8 percent commission on such products. When the products mature in, say, three years, they need to be rolled over. The banks could get 4 to 8 percent again.

Some trust companies are big and have distribution power. Most, I believe, are vehicles at the service of big banks. They charge a commission, too, though it is much smaller than the banks.

The adverse selection problem begins with who is willing to pay such high fees and high interest rates at the same time. Let's say the interest rate is 10 percent. The product is for three years. The commissions for banks and trust companies total 10 percent. The borrower gets 90 percent of the loan amount for a 30 percent interest payment over three years. Few businesses in China earn such a high return. The trust loan borrowers, mainly mining companies and property developers, often have greenfield projects. Their future depends greatly on the macro environment. The borrowers essentially gamble with other people's money.
As I wrote previously, the real story isn't some huge collapse, rather it is an issue of a trend shift. It only takes a small change to tip tje balance at when there are large imbalances and businesses are operating on very thin margins. Therefore things may seem to blow over, but in reality a major change is underway. Conversely, I've been expecting this shift for going on three years......but the global environment is worse today than it was in 2011 when Chinese real estate looked like it would crack.

Speaking of changing trends: Many Local Gov'ts Aim for Lower GDP Growth This Year
Last year officials in 24 places aimed for double-digit expansion, but only 14 have set such lofty targets for 2014


新年快乐!Happy New Year! 飞黄腾达!

Many shops are already closed in Beijing because the proprietors went home for New Year. Even some large websites have stopped updating the news. This blog will be updated lightly as well during the week long holiday.

Chinese Zodiac predictions here, for each sign: 2014 Chinese Horoscopes for 12 Chinese Zodiac Signs In the Year of Horse

Also here: Chinese New Year 2014 Horse: What Does Your Zodiac Animal Mean?


Latest on the Trust Default; Some Chinese Investors Say No to ICBC Offer

ICBC Offers Clients Option to Recoup Funds From Trust
Rights in the 3 billion-yuan ($496 million) product issued by China Credit Trust Co. can be sold to unidentified buyers at a price equal to the value of the principal invested, according to one investor who cited an offer presented by ICBC and asked to be identified only by his surname Chen. China Credit Trust earlier said it reached an agreement for a potential investment and asked clients of ICBC, China’s biggest bank, to contact their financial advisers.
Getting the principal back is good, but failure to pay all the interest is still a failure to fulfill the contract.

This article (“诚至金开1号”违约前夜获重组) notes investors will receive interest from year 1 and year 2, which were 9.5% and 10%, but will only receive 2.8% from year 3, lowering the total yield to 7.5%, below what was promised.

This Chinese article (“诚至金开1号”解决方案出炉 剩余利息不兑付) says the customers can keep their rights, collect interest and possibly recoup their principal in time. If they take the deal, they get their principal back with reduced interest. At least one investor interviewed for the story rejected the offer as unacceptable.

The big story here was never the default. Even if the entire $500 million were lost, it would be a drop in an ocean of the Chinese financial system. What matters here is the psychology of investors. Are they going to keep buying WMPs and trust products in the wake of this default? I believe the answer is no, they will not, and that will lead to a further slowdown in credit. The only bailout that might make a difference would be a total bailout that delivered all the principal and interest to the investor. Every signal out of the government and central bank shows they want to restrain credit growth, thus a total bailout is very unlikely.

This is why I disagree with this take:

The $469 mln bailout of this investment product risks inflating China’s shadow banking bubble even more

There is a poll in the article, taken from a Chinese website, which shows 70% of respondents would not invest in WMPs if they are not guaranteed. However, all that is required to pop a credit bubble is for the growth rate to slow considerably because people assume high growth rates will continue. The failure to pay the promised rate of interest is enough to make investors look elsewhere for returns, including overseas. It is too early to tell what the effects of this will be for the overall economy, but this is a serious event not in and of itself, but because it signals the end of credit expansion, or at least the beginning of the end. Given the size of China's credit market and its rapid expansion in the past few years, the risk of a disorderly reversal of trend (a financial crisis) is high.

Western Media Wrong Again on China; China Becoming More Free As America Becomes More Tyrannical

China jails prominent rights activist for four years

Xu Zhiyong's jailing will send a stark warning to activists that the Chinese Communist Party will crush any challenge to its rule, especially from those who seek to organise campaigns.

It also diminishes hopes for meaningful political change, even as China pledges to embark on economic reforms.
As I wrote last year: Political reform in China taking place through economic channels. The economic reforms will eventually lead to political reform, but there need never be an election in China for Chinese citizens to become more free and the trend in Asia is towards aristocracy. See Princelings are ruling not just China.

Why would China's Communist Party give up power now? Objectively, it is not clear that political reform would bring positive results. Those Westerners calling for political reform first are the same people who supported democracy protests and elections across the Arab world. And how's that working out?
Secretary of State John Kerry on Saturday raised concerns about the fairness of a referendum on Egypt’s revised Constitution after the military-led government announced that it had passed with an extraordinary 98.1 percent of the vote.

......The near unanimity of the vote was plausible because the government thoroughly suppressed any opposition to the new charter. A campaign of arrests and mass shootings has crippled the Brotherhood, the main opposition group, which was formally outlawed three weeks ago, and it had called for a boycott of the plebiscite. Almost no critics of the charter were able to express their views in the news media or on the streets. And several activists were arrested just for hanging signs urging a “no” vote.

Meanwhile in America, President Obama's political opponents are targeted by the IRS or indicted for violations of campaign finance (see the latest: Conservative author and pundit Dinesh D’Souza charged in campaign finance case) even though in the campaign finance case, the President himself violated campaign laws numerous times.

Obama campaign accepted foreign Web donation — and may be hiding more
The Obama re-election campaign has accepted at least one foreign donation in violation of the law — and does nothing to check on the provenance of millions of dollars in other contributions, a watchdog group alleges.

Chris Walker, a British citizen who lives outside London, told The Post he was able to make two $5 donations to President Obama’s campaign this month through its Web site while a similar attempt to give Mitt Romney cash was rejected. It is illegal to knowingly solicit or accept money from foreign citizens.

Walker said he used his actual street address in England but entered Arkansas as his state with the Schenectady, NY, ZIP code of 12345.

“When I did Romney’s, the payment got rejected on the grounds that the address on the card did not match the address that I entered,” he said. “Romney’s Web site wanted the code from the back of card. Barack Obama’s didn’t.”
The only difference between the stories is the relative power of the two governments, but economic reform in China is weakening the government (in the sense of reducing the size of government, politically the CCP still has control) while in America, the trend is for a larger and more intrusive government that limits the freedoms of the people.

Economic Laws Sometimes Work Very Quickly

As smelters weigh cost, Indonesia's ore export ban may backfire
Indonesia's ban on exports of key mineral ores - unless they are processed in the country - risks backfiring as weaker commodity prices mean it is not cost-effective to invest in expensive smelters and refineries.

The ban, which came into effect on Jan. 12, was unveiled in 2009 as a commodities boom began to froth and Jakarta sought to extract more value from its mineral resources. But metals prices and margins have since fallen, leading to oversupply and less need for building more processing capacity.
It works more slowly for economies that import cheap labor which makes it not cost effective to invest in capital goods. Net result: lower productivity and lower wages.

The Party Starts When ADXY Falls Below 114

It may not break this time because an intermediate bottom may be put in by the end this week or early next week, but this is one of the most important charts to watch.
ADXY is 36.9% CNY, 11.8% HKD, 11.6% KRW, 11.5% SGD, 9.2% INR


Trust in Banks is Falling

HSBC imposes restrictions on large cash withdrawals
Some HSBC customers have been prevented from withdrawing large amounts of cash because they could not provide evidence of why they wanted it, the BBC has learnt.

Listeners have told Radio 4's Money Box they were stopped from withdrawing amounts ranging from £5,000 to £10,000.
That is from the U.K.

In China, the bank asked what I wanted to do with the funds from a wire transfer. I don't know why they asked, but later when I saw this HSBC story and considered the recent stress in the banking system and bank closure in Yancheng, it made me wonder. Whereas at another time, I would have only assumed it was to stop hot money inflows or was a long-standing regulation being enforced under President Xi.

Here's Egon von Greyerz:
If you take the Turkish lira, that plunged to new lows this week, and the Russian ruble is at the lowest level in 5 years. In South Africa, the rand is at the weakest since 2008. The currencies are also weak in Brazil and Mexico. But there are many other countries whose situation is extremely dire, like India, Indonesia, Hungary, Poland, the Ukraine, and Venezuela.

I’m mentioning these countries individually just to stress that this situation is extremely serious. It is also on a massive scale. In virtually these countries currencies are plunging and so are bonds, which is leading to much higher interest rates. And the cost of credit-forward swaps in these countries is surging due to the increased credit risks.

So why are we seeing this major pressure in emerging markets? People are worried about these countries’ ability to repay. This fear was triggered by the Fed’s tapering announcement. Most of these nations have very low reserves in relation to external debt, and they are totally dependent on rolling over the loans.
The Fed's taper announcement last May plays a role, but an equally large role is played by China's slowing/rebalancing economy. Aside from the total basket cases such as Argentina and Venezuela, countries such as Brazil, Indonesia and South Africa all depend on Chinese demand for resources. Meanwhile, across other emerging markets there was a buildup of credit in part due to emerging market strength, fueled by Chinese growth which came from out of control loan growth, but also caused by hot money flowing out of the United States. The system is starting to move in reverse and another emerging market bust may picking up speed.

The last big crisis came in 1997-98. In 2008, there would have been another huge crisis if not for the central bankers all over the world. Remember that the U.S. dollar was rallying during the crisis. Unlike 1997, the U.S. economy is no longer larger than emerging markets. The global effect of another emerging market crisis will be larger (and the list of countries shows it is already covering a larger geographic area).

Also important: all of these nations are customers for Chinese goods and also in some cases export competitors. I covered this most recently here: Yuan Arbitrage Replaces Trade as Exporters Go Bust; Endgame Begins for China Bubble, but it has been a story for going on three years now. Chinese exporters have very thin margins and demand from the EU and US is flat at best. China must devalue to stay competitive or accept slower economic growth (slower than already forecast).

Finally, consider the last sentence in the quote above: "Most of these nations have very low reserves in relation to external debt, and they are totally dependent on rolling over the loans." China doesn't have an external debt problem, but it does have debt that far exceeds currency reserves used to back the yuan, and it the financial and real estate markets, and thus the whole economy, depend on rolling over the loans. The main difference with China then, is that if (when) the yuan devalues, it can find a bottom sooner.


ICBC Chairman: Bank Will Not Compensate CCT Investors, Or Maybe A Little

Jiang Tells CNBC That ICBC Won’t Compensate Trust Investors
Industrial & Commercial Bank of China Ltd. Chairman Jiang Jianqing said the lender won’t compensate investors for losses tied to a troubled trust product distributed by the bank, CNBC reported on its website.

The incident will be a lesson for investors on moral hazard and risks associated with such investments, Jiang told CNBC from the World Economic Forum in Davos, Switzerland. The Beijing-based lender won’t take “rigid responsibility” for the losses and will review all its partnerships in entities with which it does business, Jiang said, according to CNBC.


But then: China's ICBC says will help repay investors in troubled shadow-banking scheme

The time stamp is later on the latter story, but I assume the Chairman's words are the current policy.


Getting a Handle on China's Credit Bubble

Here is a chart of the change in GDP in the United States divided by the change in Total Credit Market Debt Outstanding (TCMDO). What this chart shows is the falling utility of debt. The first dollar of credit can generate a high return for a business, but each additional dollar of debt has less impact. This is a basic concept in economic (and in life). One can die from drinking too much water, and eventually, adding too much debt leads to losses, such that cutting debt actually increases growth.

The key number for a credit bubble is when the increase in GDP from debt does not exceed interest costs. If interest rates are 5% and an increase in debt only generates a 4% increase in output, then it is a losing proposition and default is coming.

In 2008, nominal Chinese GDP stood at $4.5 trillion. At the end of 2013, Chinese GDP stood at $9.3 trillion. That is a net increase of $4.8 trillion (this is nominal GDP, which in some years grew at more than 20%).

Credit In China Has Grown From $9 Trillion To $24 Trillion Since 2008. A net increase of $15 trillion.

Over the past five years then, the increase in GDP divided by the increase in debt equals 0.32. That's around the rate at which the U.S. was seeing in the 1980s and 1990s. In China, the cost of capital is higher and the economy is (supposed to be) growing at a faster rate. So if China is effectively adding debt at the same rate as the 1990s economy in the U.S., that jives with investors such as Marc Faber who say China's GDP growth is closer to 4%.

China crisis may be unavoidable
I, however, question the idea China can grow its way out of this problem.

That's because, first of all, the debt issuers are not the primary beneficiaries of gross domestic product growth. The primary beneficiary of GDP growth is the central government, which gains in the form of tax revenues. Debt issuers, on the other hand, are mostly local and their primary revenue source is land sales.

There is no direct, mechanical or automatic link between economic growth and local authorities' debt service capacities, as we have witnessed since 2008 as total social financing, a broad measure of credit, has exploded.

The argument that China can grow out of its credit bubble is valid if and only if GDP growth increases the debt service capacity of the debtors. As GDP is only a measure of economic activity, not efficiency or profitability, GDP growth alone does not guarantee a proportional increase in the revenue of local authorities that could be used to pay down the debt issued via financing vehicles.
Start to question the quality of Chinese GDP growth and the picture is worse.

Bank Failure in Yancheng?

ZeroHedge picked up this story about a bank unable to repay deposits, perhaps until 2015.
江苏盐城多家合作社人去钱空 数亿存款无法兑现

Although the bank is a farmers co-op, Yancheng is in the relatively wealthy Jiangsu province.

CNR network Yancheng January 23 news (reporter Bai Yu), according to Voice of China "News" reported today is a small child in the north, the people around are also getting ready to celebrate the Spring Festival horse. However, Yancheng City, Jiangsu Province, it reflects some of the audience, the year is not over, because the money to his own investment boondoggle.

The audience said that in recent years, opened dozens of Yancheng local "farmers mutual funds Society", these cooperatives approved the establishment by the competent local agriculture, and received by the local Civil Affairs Bureau issued a "certificate of registration of private non-enterprise units."

Deposit-taking and lending by cooperatives operated operation, and to promise savers, depositors after maturity deposits not only can get the interest, you can also get bonuses. However, beginning in early 2013, Yancheng City Pavilion Lakes region continue to have a number of co-op money people to empty, many savers deposits can not be cashed, thus many people's lives into a corner.

Tinghu East Side, Environmental Protection Industry Park, the new foreign mutual funds peasant community has doors locked, CUP, salt Dong-jin, Rui Xinnong people have no money to mutual funds cashing agency.

These cooperatives, from signs to the interior, from the counter window to the waiting area, from display to display card, both the bank and the general is not much difference.

Dong-farmers in Salt Lake Pavilion mutual funds club, a duty officer's office, told reporters, because many people take money, put out loans difficult to recover, leading to funding strand breaks.

Salesperson: Put all put out, put out a few years, the money has been slowly closing the end is difficult to ask for money, right? And now there is no money coming in, people now no one to save money, and take all the money.

Reporter: So take the money it should be that way.

Salesperson: I know I should, however, take off, get cut off, no money, but turn came.
CUP peasant community in mutual funds, posted on the door of the display card with the main leaders of the cooperatives Yancheng instructions, no salesperson counter window, depositors who inquire about the messages to each other.

Yang Dong-jin of salt farmers in the new mutual funds outside the club's security, 80-year-old Zhou Yan Jie, savers told reporters that his wife is already 79 years old this year, the perennial sick, the deposit can not be cashed, has been relying on borrowed money to see a doctor, but now nobody willing to lend to them, his wife's condition is increasingly serious.

Reporter: You have saved much money?
Jiehe week: more than 110,000 dollars, is to prepare for retirement, until older, can not take the time to re-used with the use of our rural people, there is no salary, the pension money is ready.

Lower East Side club savers farmers mutual funds, Ms. Xue was a retired teacher, since 2011, Ms. Xue cooperatives were deposited more than 420,000 yuan.

Ms. Xue: The bank has a deposit-taking his staff, he would say that he is a government action that has the government's official seal, to give you some interest, as well as the appropriate dividends, because we believe that the government, so we fully believe him , we put the money lost inside, who thought in November, Xi Chu who told us that something was wrong.

Savers say cooperatives annual interest rate of 3.5%, plus dividends. Pavilion Lake District, according to the relevant documentation, these farmers mutual funds socioeconomic "Pavilion Lake District rural work office," approved the establishment. Then, under the supervision of government authorities, why would the situation depositors funds lost happen?

Yancheng City Pavilion Lake District Office of Rural Zhuang Yu Long said that after the year 2004, according to the central spirit of the document, Yancheng first nationwide pilot "Farmers Co-operative Society funds' aim is to provide services to the farmers in the region to address the needs of farmers microfinance difficult problem. So far, the region's five towns three streets approved the establishment of 24 community farmers' mutual funds, some of the illegal operation of cooperatives in the business process is the fundamental cause of abnormal capital chain.

Yu Long Zhuang: RUIXIN this out a set of false accounts, primarily dealing with our supervision, also check out the investigation, and he put the money to invest in real estate development up, all of a sudden not being paid. New Ocean to one to two years to put all the money loaned out back. East is the head and ran away, he carved a chapter that he printed documents, illegal fund-raising, public security organs have now filed. Funding environmental protection industry park is also a little nervous, UnionPay he borrowed some money to a person to engage in local real estate development. These violations are engaged in their own decision, if he is not illegal, to put the money to the village folks farmers for agricultural production and life, then he can be assured, there is no risk of them.

Reporter: Now it comes to holding a certificate of deposit but not full payment of depositors involving a total number of households, there are statistics that you do here?

Yu Long Zhuang: large numbers may have more than two thousand households.

Reporter: involves the payment of funds should relate to how much money?

Yu Long Zhuang: This is not a good statistic.
According to rough statistics depositors who currently amounts involved, or up to several million dollars.

Long Zhuang Yu also said that the club is relatively new farmers mutual funds, lack of management experience in the District Agriculture Office, the lack of professionals, there are loopholes in the regulation, but it will do its utmost to regain the loss of depositors.

Yu Long Zhuang: we put all of his certificates of deposit are received out. You are only responsible for the loan out of the money back to the people against. The people's money has been invested in other projects go, we have to be tracked to ensure no loss of capital assets, can dispose of his assets disposed of, can recover quickly come back.

Reporter: There is a specific timetable yet?

Yu Long Zhuang: 2014 cashing out the entire program.

Reporter: When did all of these things can be properly resolved?

Yu Long Zhuang: the latest is 2015, 2015, all settled.

Recently, the CPC Central Committee, the State Council "to deepen rural reform on a number of opinions to accelerate the modernization of agriculture" clearly be in the "stick membership system, closed principle, without Absorbing Foreign lending, do not pay a fixed return, and promote Mutual funds community-based organizations in rural development. "

The face of the status quo, as the first pilot in the country, "farmers mutual funds Society" will be thinking whether Yancheng? Thousands of savers deposits of several hundred million dollars will be how to recover? Yancheng "Farmers Co-operative Society funds," which summed up the experience and lessons learned in the development process? Are there other concerns? Voice of China will continue to focus on.

Ukraine Takes An Authoritarian Turn

Maybe the Most Orwellian Text Message a Government's Ever Sent
“Dear subscriber, you are registered as a participant in a mass disturbance.”

That's a text message that thousands of Ukrainian protesters spontaneously received on their cell phones today, as a new law prohibiting public demonstrations went into effect. It was the regime's police force, sending protesters the perfectly dystopian text message to accompany the newly minted, perfectly dystopian legislation. In fact, it's downright Orwellian (and I hate that adjective, and only use it when absolutely necessary, I swear).

But that's what this is: it's technology employed to detect noncompliance, to hone in on dissent. The NY Times reports that the "Ukrainian government used telephone technology to pinpoint the locations of cell phones in use near clashes between riot police officers and protesters early on Tuesday." Near. Using a cell phone near a clash lands you on the regime's hit list.
The U.S., Europe or China can do this as well, or if they don't have the capability, they will develop it soon after hearing about this.

PBOC Pumps Again in Same Week

Earlier in the week, the PBOC pumped 255 billion yuan into the banking system. (See PBOC Intervenes to Halt Rate Increase in Advance of Holiday)

The PBOC upped the amount today by 120 billion. 央行本周为春节量身打造3000亿逆回购
The reverse repo is 21 days, in order to expand the interest rate tender, the successful rate of 4.7%. Count of 180 billion yuan on Tuesday, this week launched a total of 300 billion yuan reverse repo operations 21 days period.

Market participants said the central bank is so generous successive reverse repo really rare, and the total amount within 3 days of almost 375 billion yuan a near-record, while the highest is in the February 5, 2013, the central bank open market operations carried out in two of a total of 450 billion yuan reverse repo operations, and within a single day. Thus, it is sufficient to stabilize during the Spring Festival to see the central bank liquidity squeeze determination.
Spring Festival was in February last year.

February 2013: Inject ¥450 billion in one day (Spring Festival related)
June 2013: Inject ¥300 billion in one month
September 2013: Inject ¥290 billion in one day
December 2013: Inject ¥300 billion over three days
January 2014: Inject ¥255 billion in one day ¥375 in one week (Spring Festival related)

Full article from above, Google Translated:
January 23, following the central bank in January 21 days the amount of drain 255 billion yuan, the central bank in the open market on Thursday launched a 21 days period of reverse repurchase and continue to drain 120 billion yuan, within three days of the total amount of reverse repurchase up to 375 billion yuan.

The reverse repo is 21 days, in order to expand the interest rate tender, the successful rate of 4.7%. Count of 180 billion yuan on Tuesday, this week launched a total of 300 billion yuan reverse repo operations 21 days period.

Market participants said the central bank is so generous successive reverse repo really rare, and the total amount within 3 days of almost 375 billion yuan a near-record, while the highest is in the February 5, 2013, the central bank open market operations carried out in two of a total of 450 billion yuan reverse repo operations, and within a single day. Thus, it is sufficient to stabilize during the Spring Festival to see the central bank liquidity squeeze determination.

Although the central bank in January 21 on invested 255 billion yuan of funds to the market, the same day shibor interest rates go down, but in between the 23rd Shanghai Bank Offered Rate data show that the trend of each species differentiation period, short-term varieties remained stable, but some of the long-term upward trend remains varieties, January varieties are showing a downward trend.

It is worth noting that these two species have emerged in the operation of the reverse repurchase 21 days fewer appear, dates back to 2005, the last time the central bank reverse repo operations before the Spring Festival. Similar to 2005, the central bank also on Tuesday and Thursday before the Spring Festival were conducted 21-day reverse repurchase operations, however, the central bank's reverse repo amount compared to 2005 were carried out by 12 billion yuan and 160 billion, almost doubled in the amount of 10 times.

Since 21 days reverse repo can complete across the Spring Festival holiday, and Tuesday and Thursday can declare demand for institutions to provide a choice to help ease the supply and demand cross-section of funds, to prevent the emergence of short-term capital side volatility. Analysts believe that 21 days of reverse repo operations are designed specifically for the Chinese New Year, "tailor-made", which is to stabilize the interbank market interest rates have a certain effect.

According to Shanghai interbank offered rate data, which, on the 23rd largest increase varieties shibor 14 days, up 38BP to 5.94%. After 21 days since the amount of drain 255 billion yuan the central bank, which breed in the 21, 22 daily to maintain steady trend, however, although the central bank once again turn on the water 23, 120 billion yuan, also failed to suppress the rise of the species live.

Analysts believe that, although the central bank reverse repo flagship species just 21 days to Chinese New Year holidays included, but 23, 14 days shibor than other varieties or description is still a large demand for liquidity during the Spring Festival, but also shows that with the Spring Festival approaching, the demand continues to increase liquidity, the central bank in the 21st and the 23rd consecutive reverse repo also failed to fully meet the market.

And overnight, seven days varieties trend remained stable. Among them, 23, rose to 2.4% overnight varieties, 7 days varieties rose 6.9%, while the figure from the historical trend of the species, in addition to the 20-day jump a hundred points, the central bank since the 21 days the amount of drain 255 billion yuan, which two species have remained stable.

In addition, although a month varieties still high interest rates, but the trend has been a downward trend. 23, January varieties rate fell to 6.7% 24BP. Relative to the 20th, the species has declined more than 7 percent interest a lot.

Ultra-scale reverse repurchase fueling asset price

The central bank has a number of large-scale reverse repurchase exceeded expectations of market participants, and the resulting positive financial side also contributed to the bond market asset prices, particularly in interest rate debt, credit debt, debt represented.

Shanghai Securities Hu Yuexiao this view, "the reverse repo scale far higher than market expectations, and 21 days of reverse repurchase just cover the Spring Festival holiday, released by the central bank liquidity-than-expected impact of large-scale, institutional funds face on New Year's significant improvement in confidence, the overall funds face further pick up yesterday. "

In the central super-scale reverse repurchase put liquidity driven by bond market asset prices continue to rebound.

A Southern a bank, told reporters that "two consecutive reverse repurchase a total of 375 billion yuan is definitely exceeded market expectations, the bond market also rose this morning turned Although 21 days reverse repo is mainly in response to the Spring Festival temporary varieties, but such a huge amount of reverse repurchase a greater stimulus to the market, the central bank so distributed New Year red envelopes will make money before the holiday hassle-free. "

As the central bank to carry out a huge amount of reverse repurchase the market liquidity has been significantly improved, 22, a market interest rate debt significantly warmer. Hu month that "in the face of the release of funds under the background of positive signals, the interest rate yields gained significant support."

Similarly, by the favorable impact of the financial side as well as credit debt, bond futures and derivatives. As the central bank's funds face shot stable before the holiday, the total invested 375 billion yuan of liquidity, bond futures prices also rebounded strongly. Hu month analysts believe that "with the central bank shot, bond futures bearish trend is expected to be reversed."

A futures analyst for 21st Century Network reporter said, "As the central bank through open market operations, the market continued to release the 375 billion yuan of liquidity on the term debt market has played a significant role in boosting such futures prices opened higher in early trading go, and broke the previous low volatility in the 91-92 million range pattern is expected to remain strong bond futures market trend in the short term. "

In addition, the stock market, there have been more substantial rebound in the 22nd CSI 300 Index rose 2.58 percent. In the case of the central bank to release liquidity, most interest-based exchange-traded products also rose on the specific variety, which TEDA Manulife poly B or up 4.66 percent, Wells Fargo rose 1.06% GEM A, Peng Hua resources A rise 0.86 percent. 23, although the Shanghai Composite Index and Shenzhen Component Index slight pullback, but trading was more active, more than 50 cities stocks daily limit, the GEM index rose 2.08 percent.

What Duck Dynasty and Sochi Have In Common

In Russia Rising and Putin pushes American front groups out I looked at changes in Russia.

The common view of history is that the Communists lost in the 1990s. The Soviets gave up without firing a shot and they decided to become capitalists, albeit while retaining Russian nationalism, which saw a resurgence in the 2000s under Putin and which continues to grow.

Another view says the "communists" won. The leftists in Russia, the capital-C Communists, lost to the American leftists. This wasn't a victory of West over East, but of the superior economic system defeating the inferior system. After the defeat of communism, Russians did not in fact want to continue on the path towards greater revolution, but instead rejected revolution wholesale and returned to nationalism and religion.

Thus, the obsession with gay issues in Russia and the anti-gay propaganda law isn't actually about homosexuality per se, but it one move in a larger game of East versus West that is increasingly turning into another ideological battle. This time, instead of a battle between two economic systems, it is a battle between two cultural systems.

In the video below, Srdja Trifkovic discusses how Western political leaders cheered on the gay pride parade in Belgrade. Why is a gay pride parade in Eastern Europe an issue for the State Department? Why are Western front groups pushing Western cosmopolitan values into Russia? These are the new battle lines.

There is also part 1 of the interview in which Srdja Trifkovic discusses how education in Eastern Europe under communism was actually superior to that of the West because it maintained the classical system. Ironically, under communism much of traditional society persisted because the system kept people poor and thus increased the value of non-economic values such as family. There was a very clear persecution of Christians which helped them preserve the faith. In contrast, the open West made far greater inroads into the destruction of the family, traditional culture and religion because there is no organized effort to take them apart and material wealth allowed societies to subsidize economically poor lifestyles, such as single motherhood.

Thus, the Sochi Olympics become a perfect moment for the West to attack the Russia. And it is also the perfect moment for Putin to get the West to show its hand. For example, Africa is increasingly becoming an important region in the world economy, particularly with respect to resource production. China is investing heavily there in the hunt for resources, while resource rich Russia seeks to influence global commodity supplies. Most of the nations in the world that criminalize homosexuality are in Africa and the trend is moving in the direction of Russia, not the West. 83 countries where homosexuality is illegal

New Law In Nigeria Bans Gay Meetings
A new law in Nigeria, signed by the president without announcement, has made it illegal for gay people to even hold a meeting. The Same Sex Marriage Prohibition Act also criminalizes homosexual clubs, associations and organizations, with penalties of up to 14 years in jail.

The act has drawn international condemnation from countries such as the United States and Britain.

......But Nigeria's law reflects a highly religious and conservative society that considers homosexuality a deviation. Nigeria is one of 38 African countries — about 70 percent of the continent — that have laws persecuting gay people, according to Amnesty International.

The new Cold War is a cultural war. It is also an internal struggle across these nations, with factions on each side in each nation. The attack on the Duck Dynasty star over comments about homosexuality is coming from the exact same force that is attacking Russia and the Sochi Olympics.

Good News in the Looming CCT ICBC Trust Default, But Cash Crunch Fallout Continues

Events took a turn for the better in the "Credit Equals Gold" looming default story.

China provincial govt may bail out shadow bank to avert default
A Chinese provincial government may help bail out investors in a troubled high-yield investment product, local media reported on Thursday, in a closely watched case viewed as a potential landmark precedent for defaults in China's shadow bank sector.

Shanxi province in central China, home to the struggling coal company that received a high-interest loan through an investment trust, may provide half of the funds necessary to repay investors when the trust product matures on Jan. 31, the 21st Century Business Herald reported on its website on Friday, citing an unnamed source.

......China Credit Trust also told investors on Wednesday that the coal company, Shanxi Zhenfu Energy Group Ltd, had received a key government permit that would enable it to restart production on one of its coal mines.

Zhenfu also resolved a property-rights dispute with villagers over another mine, the trust said.

"The value of these two mines will now rise significantly. Basically these two assets have been revitalised," the official China Securities Journal quoted an unnamed trust industry executive as saying on Thursday.
The latter was one of the issues mentioned in yesterday's stories: CCT has shares in Zhenfu mines, but without mining permits, the shares are nearly worthless.

Elsewhere, China Credit Trust cites progress in avoiding shadow-bank default
China Credit Trust Co Ltd, whose product could set a landmark precedent for default in China's fast-growing shadow bank sector, said it is in discussions with new investors in an effort to raise the funds necessary to pay off current investors when the high-yielding product matures on Jan. 31.

A lot of focus was placed upon the potential default of the trust, but the bigger issue remains China's credit bubble. A bailout does not help the situation, actually it signals to investors that even this small default is such a threat that the government will step in and rescue it. The situation with "Credit Equals Gold" came about because of larger trends. China is cracking down on corruption and those crackdowns will unearth shady business dealings with government officials; combined with the corruption crackdown is greater restriction on local governments ability to borrow money, which slows the economy (slower growth is better than wasted investment, but in the short-term this puts pressure on the financial system); and overall tighter monetary policy has led to a cash crunch at the end of the past three quarters.

The effects of December's cash crunch continue to spread though: China factory contraction shows weak start for economy in 2014
Weighed down by weaker domestic and export demand, the flash Markit/HSBC Purchasing Managers' Index (PM) fell to 49.6 in January from December's final reading of 50.5, dropping below the 50 line which separates expansion of activity from contraction.

The data is the first indication of sentiment in the 56.9 trillion yuan ($9.4 trillion) economy, the world's second-largest, for the new year.

"Such a reading highlights the deteriorating growth outlook as policymakers are tightening their monetary stance, pushing through with an austerity campaign, and withdrawing stimulus measures," said Dariusz Kowalczyk, a senior economist and strategist for Credit Agricole CIB in Hong Kong.


The Other Trust Problem

Does trust in the government matter? Well, the word credit comes from the Latin word for believe, trust. The financial system is based on credit and the fiat currency printed by the United States is backed by "the full faith and credit" of the United States federal government. When trust in the government falls that directly impacts the financial and monetary system, leaving aside the socionomic reasons for the decline of both systems.

Trust in U.S., other governments plummets after state missteps
Just 37 percent of college-educated adults told the Edelman Trust Barometer that they trusted the U.S. government - 16 points down on a year earlier and seven points below the global average.

The United States was not quite at the bottom of the heap as levels of trust in governments in some Western Europe countries including France, Spain and Italy were even lower, but the scale of the American decline was particularly dramatic.

Public Trust in Government: 1950-2013

Waning trust in government
A recent Eurobarometer survey has shown a significant loss of trust in the government. When the poll was taken last autumn, six months after the Labour Party’s sweeping general election victory, trust in the government had fallen from 59 per cent to 48 per cent, a drop of almost one fifth. I dare say that if another poll were taken today, the level of trust in the Maltese government would have dropped even further.

Ukraine: 3 protesters dead amid clashes with police in Kiev
The clashes are an escalation of weeks of largely peaceful public protests prompted by President Viktor Yanukovych's decision in November to spurn a planned trade deal with the European Union and turn toward Russia instead.

The European Union and United States have urged all parties in Ukraine to exercise restraint and find a democratic solution to the political crisis.

Russian Foreign Minister Sergey Lavrov also warned Tuesday that the situation in Ukraine was "getting out of control" and urged dialogue between all the parties.

Thai 'red-shirt' leader shot as emergency rule begins

The World’s Most Visited City Is Again Marred by Violent Protest: Here’s Why

Turkish Government, Shaking Up Police, Now Seeks More Power Over Judiciary

Beijing's crackdown on corruption

The Loss of Trust in Higher Education

Climategate, Public Opinion, and the Loss of Trust
In 2007 and 2008, climate change reached the top of the international agenda......By the end of 2009, however, the situation had changed.

SECOND general in charge of nuclear missiles is fired over 'loss of trust' as Pentagon is forced to deny he's an alcoholic

For Obama, loss of trust over health-care law poses major problems for his agenda, legacy

Lack of trust can tell us what is missing
It was disheartening to read this headline, recently: “Poll: Americans don’t trust one another.” Disheartening, yes, but not surprising.

Anyone who can think critically about what goes on from day to day has developed an internal gauge that registers when something “seems” odd or not quite right. For younger observers, it’s a feeling. Feelings can and do pass. For the older observers among us, it’s a reflection of life’s experience. Experience, good and bad, is what it is.

The poll conducted in November by AP-GfK found that Americans are suspicious of each other in everyday encounters.
Diversity isn't helping matters, it only adds a fundamental structural loss of trust on top of declining social mood.

Latest from press on CCT and ICBC Trust Failure

No big developments, but here are three of the latest stories (all Google Translated) in the Chinese press.

China Credit Trust Crisis: Investors Want Answers From ICBC Private Banking Unit中诚信托兑付危机:投资者拟向工行私人银行讨说法

I highlighted a passage in this article, here it is in case you skip this article:
However, most industry insiders interviewed still relatively optimistic. They believe that although this year is cashing peak, but overall risk is not great, mainly due to the maturity of the project is the highest proportion of real estate investment trust, as long as house prices and land prices does not appear obvious decline, it will not dispose of assets will be very difficult. Even if the risk appears cashing, just liquidity risk.

Article in full:
January 31, 2014, is China's first lunar month, but for the CCT is concerned, it is destined to be a sad mark. A 3 billion yuan of the company's mineral trust scheme expires on this day, and the related trust account balance is only 5.6694 million yuan, the company's actual controller of the financing behind bars, scheduled debt almost impossible. There is no doubt that this event will test the "rigid honor" unwritten convention Chinese trust industry has always been.

Securities Times reporter was informed that some investors to buy these products is considering rushed ICBC Private Banking and Credit Trust headquarters, communication payment issues. At the same time, they express their anger on the horizon, such as online forums.

As CCT channel side, is full to avoid becoming rigid honor those who break and items recommended side and agency side ICBC will have been very calm, which caused the impasse continues to ferment.

This is not a rigid rule for the first time tested payment, it is difficult to be the last. After Hurricane Mengjin trust industry over the past two years, and crossed the threshold of 10 trillion, the rapid growth of sequelae gradually.

Prudential sounding the alarm event

CCT did not think, as a channel fee three years ago to make their own cash into the storm, but did not expect this honor this year's financial crisis even be considered a default "first shot" insiders.

January 31, 2010, Credit Trust launched the "honest to open the 1st set of gold trust scheme" management for a period of 36 months. After twice raising, raising the total size of the product was 30.3 billion yuan, mainly used for coal prices in Shanxi Energy Group Limited amplitudes equity investment.

However, in the May 11, 2012, on suspicion of amplitudes Group Vice Chairman Wang Pingyan crime of illegal deposits from the public, in filing the same day jingfangxingju. CCT immediately released an interim report, and caused an uproar.

Late last year, announced that the Credit Trust to investors, these plans can not be cashed current income trust based on the expected value. And its latest management report admitted that the product of the trust property realized there is uncertainty before the liquidation, does not rule out walking proceedings.

According to informed sources, China Credit Trust and funding of this project are from ICBC, China Credit Trust which played only "channel" effect, the money the bank is about to detour into its selected projects, thereby helping it to avoid the credit control . Thus, only a few channels to earn fees Credit Trust think they should not be held to settle the obligation.

However, from a legal perspective, ICBC as the consignment of the product line is not liable for losses; CCT Although there is no legal obligation to honor rigidity, but it does not want to be the destroyer of industry rules, both sides caught in the game deadlock.

"This event has attracted regulatory attention, the regulatory authorities have been involved in the coordination, the final result should be treated not break the rigidity of payment, is likely to be funded both sides to reveal all the details, but disclosed may be another way." An Sources close to the regulators, said the incident clarify responsibility for collective trust channel business model stakeholders have meaning.

Prudential predicament event also reflects the aftermath of the Trust channel business. Over the past few years, the trust industry by virtue of a license contract a lot of the advantages of channel-type business. McKinsey has estimated that the channel business model contributed 39% of 2012 total revenues of the trust industry.

More than ten thousand one hundred million yuan coming due

In fact, the event also sincere trust industry will usher in the year of payment tide raised the alarm.

In general, the term trust products between 1.5 years to 2 years, that the issue of the amount of trust a lag of about seven quarters will be converted to the amount due. Haitong Securities series of case studies of credit risk report shows the trust expires in 2014 corresponds to the 2012 second quarter - the first quarter of 2013, the Trust issued 5.3 trillion in volume. This means that the amount of the trust expires in 2014 compared with 2013 growth of more than 50% in May is the peak of maturity, up to 1.7 trillion yuan.

In fact, these 5.3 trillion trust fund as a single product in the majority of the trust. Since a single counterparty as a major trust banks or institutional investors, trust does not need to be rigid payment, the more the market is worried about the rigidity of payment are mostly related to the collection of trust.

Reporter According to statistics disclosed Trust Industry Association, which has 5.3 trillion trust products Capital Trust 5782 models, involving funding of up to 1.05 trillion yuan.

The report directed at small and medium real estate investment trust, or will become a high default risk areas. According to incomplete statistics, since August 2012, at least 16 projects are under pressure into the trust, of which 10 projects related to real estate, small scale enterprises someone's private enterprises, mainly in the Bohai Sea and the long Triangle.

Real estate loans have been risk areas need attention in the trust industry, 2013 was the peak of the real estate trust payment has been exposed in the event of payment risk, real estate trust account for the majority, not including disk access is by way of trust "rigid payment" problem products.

"Trust in the past has been the product of rigid honor the unspoken rules, but in recent years a large expansion of the industry, asset size has the ability to trust management beyond the rigid payment." Jiang Chao, chief macroeconomic analyst at Haitong Securities case considered.

But the reality is often more brutal. Once there is a single occurrence of a material breach of trust products, is likely to lead to a chain reaction. Moment, each Trust are keen to avoid becoming rigid honor those who break the unspoken rules.

"A lot of trust coming due on the trust is indeed a big challenge, do not rule out the excess trust affordable range which could have a ripple effect, resulting in investors' perception of trust changes, Regulators may also impose more stringent regulatory standards. "said Lee Trust with interest, principal analyst Yang.

Trust against payment

Many trust company executives confirmed to reporters that the regulatory authorities have repeatedly stressed in internal speech, 2014 will usher in a wave of cashing peak, trust Always prepare for in advance.

According to the reporter, some trust requires trust manager "keep an eye" on historical items, beware of flaws; Meanwhile, trust companies also pay more attention to education and disclosure of information to investors.

"Now some trust managers do all day staring at the last big project for fear of an accident, did not have time to read the new project." Beijing Trust senior manager of a large trust company admits.

It seems that in the middle of a trust company executives, trust must make a choice between future earnings and reputation. Under the status quo, more trust will still choose reveal all the details, to fill a hole through a variety of channels, but if too much money involved, trust companies also consider fallback costs.

However, most industry insiders interviewed still relatively optimistic. They believe that although this year is cashing peak, but overall risk is not great, mainly due to the maturity of the project is the highest proportion of real estate investment trust, as long as house prices and land prices does not appear obvious decline, it will not dispose of assets will be very difficult. Even if the risk appears cashing, just liquidity risk.

"And in this case Prudential Mineral Trust is different, the ultimate real estate projects through financial maneuvers and trust asset disposal, basically can cover the principal and interest, so in the unlikely event of mass detonate Cheng risk unless there is systemic risk, it is not just is the trust industry, I am afraid that all financial institutions could not carry. "Trust in the prefix of a trust manager, said.

Who does not want to be the last disk access. After a series of events to honor the frequent occurrence, whether regulators, or trust company itself, are more focused on risk control and information disclosure, and strive to avoid the products in question from the source.

North of a trust to sources, the company significantly increased the risk control requirements, such as due diligence requirements while trust managers and risk control manager to the scene. In addition, the company financing parties involved in the case of private lending and more attention, usually with the financing of financial institutions domiciled repeatedly verified.

At the same time, some companies have realized the importance of timely disclosure of project risks. Li Yang believes that trust should inform the sales of products in investor risk, product risk should also be subject to timely disclosure, but not always clutching, until only allow investors aware of the crisis, so investors will have an acceptable process .

More importantly, through the Prudential event, some industry insiders began to reflect on the system of regulation and credit risk throughout the financial system.

"We should not focus only on this project can be cashed in sincerity, but should focus on the credit risk of the entire financial system, not just against the risk of pressure in the trust only him, honesty and trust in this industry is not fair." Foregoing North consider the case of a trust company executives.

Many respondents trust industry executives said that in the era of large information management, although various financial institutions business liberalized, but the scale of regulation, but there is a big difference. Many projects do even trust, brokerage fund subsidiary also dare to take, just flower drum pass of the game, the risk can only be pressed gourd dipper float, the proposed introduction of a unified regulatory agency regulatory standards.

This next article discusses the central bank's actions and the impact on the market. It led to a drop in short positions on gold.

央行“放水”缓和期指“悲情” Central bank "rescue" eases the "sadness"
Four index futures contract rose 21 across the board, mainly by central bank liquidity drain brought positive boost. Budding main contract closed at 2206.4 points IF1402, the previous day's settlement price rose 22.2 points, or 1.02 percent, and the remaining three contracts rose more in the vicinity of 0.9%. The CSI 300 stock index rose considerably, up 0.99% to close at 2187.41 points. Total open interest fell to 117,073 contracts four hands. Market participants pointed out that although the central bank is difficult to facilitate drainage of disposable means to reverse the weak, but the market pessimism eased short-term or limited downside.

Pessimism eased

Compared to affect the IPO IPO restart tide, the central bank released significantly positive liquidity prevailed yesterday, the index rose across the board.

21 is the new shares after the IPO resumption intensive market day. In this regard, Shanghai interim senior analyst Tao Qin Ying respect, the recent stock stumble endlessly fuse is issuing new shares, in addition to the pressure diversion of funds outside the IPO occurred during the fight against the larger issue of market confidence.

However, yesterday the listing does not affect a large influx of new shares, and the market reacted positively to the central bank's actions. Guotai Junan Futures senior researcher Jiang to Hu pointed out, the term refers to quantify the probability-weighted index signal big bull pointing direction of the central bank's reverse repo scale than expected pushing the stock up. On the trend of the day, despite the bulls still somewhat cautious, but undoubtedly the market pessimism can be soothing.

Tao Qin Ying further analysis, refer to Changes in the position of the House yesterday, there are two inspirations: one bull enthusiasm to do more limited upside in the vicinity of the main contract and 10-day moving average, positions gradually decline, accompanied by the index trend callback, indicating that the bulls the firm does not do more confident, less alone a massive drain the central bank to reverse the pattern of the index vulnerable possibility; Second, the 2200-point line fierce, the afternoon of the main contract refers basically run around the 2200 shock, positions fluctuation is small, and more The two sides did not appear empty one obvious advantage, indicating that the point near the market more cautious attitude.

It is noteworthy that, the index closing of positions have come down, pulled slightly increased during the late period refers to premium rate. Tao Qin Ying opinion, this display is extremely pessimistic market sentiment after easing. GF Futures researcher Hu shore also consider the futures market pessimism eased.

Short-term downside is limited

21 on the position data published by China Gold, shorts are to be cautious, with a drop in net shorts. Market participants expect the short-term downside is limited.

Positions on the main seat of the data published in the gold, the front month contract IF1402 20 seats more than 732 hand single reduction, reduction of 1209 empty one hand, the front month contract IF1403 20 seats more than a single reduction of 437 hands, empty single reduction 822 hand held. Summary three positions before the contract before the main contract IF1402 20 847 members to reduce the clearance one hand to hand 7157, 20 members of the first three contracts net short positions to reduce the 1343 hand to hand as 14,628.

GF Futures researcher shore Hu pointed out that the positions change, the long and short sides yesterday, mostly small-scale operation of the main holdings, including the reduction of the intensity of the short side on the strong side. Three cumulative net short contracts despite somewhat lower but still at a high level, which seats short main card, Huatai Great Wall were reduced pay more space to display short power continued to accumulate. In her view, the bulls Gangster Guotai Junan three seats in total holdings of more than a single contract 7 hand, indicating that the bull market confidence is insufficient, limited upside momentum. Hu shore is expected to continue to fall sharply in the index space is very limited.

However, Jiang to Hu is more cautious. He pointed out that although single clearance decreased, but still remained at a high level, in the short-term funding pressures ease premise, short hedging positions choose to wait and see. He warned that financial pressures facing the index or only short-term relief

Countdown to Maturity Final Games For China Cerdit and ICBC (诚至金开1号兑付倒计时 工行与中诚信托最后博弈)

This article translates very badly in Google and goes into legal issues. Here's my summary mixed with my own commentary:

The fund plans to pay out 600 million yuan in profits on January 31. Obviously this is far short of expectations. One insider explained how it might unfold. The most gentle approach (for investors) will be for CCT and ICBC to use their own funds and advance pay the principal and interest to investors, then use assets held by CCT, such as the 49% stock in Zhenfu, to get back the money. But an insider of CCT pointed out that getting back the funds will not be easy due to the complicated case (and there are other creditors of Zhenfu) and the amount of money they'd have to front would not be small. Another person speculated they could create a new trust with a third party and use the funds to payback investors, in essence a third party bailout. Another would be to sell the creditor's rights at a discount, but coming so close to the end the discount would need to be huge and CCT and ICBC may still need to kick in some funds to get a deal done.

Finally, if there's no third party deal and they refuse to use their own capital, they can delay the payout. However, CCT's rights are for stock in the companies, not mining rights, so their value is very small.

I have no inside knowledge of what is happening, but given that more trust failures are likely, CCT and ICBC are unlikely to step in with cash. Some experts say a default would be a good thing as well.


Three P2P Finance Companies Goes Bust, Boss Behind All Three Flees

There's a pattern of tighter credit in China.......and also of fraud cases picking up.

First some P2P stories in chronological order:
China Focus: Supervision urged for P2P lending as risks loom
Peer-to-Peer Lending: Ready to Grow, Despite a Few Red Flags
Parent firm of P2P lender raises $130m in first financing round
Bubble Fears Fail to Thwart Investment Into Chinese P2P Lenders
China's Peer-To-Peer Lending Bubble Bursts As Up To 90% Of Companies Expected To Default
Reversal of fortune in China’s peer-to-peer lending boom

And now this story out of China: First Case of Network Finance in 2014: Three Firms Go Bankrupt, Bosses Flee (2014网贷首案:三平台倒闭 老板疑跑路)

There are not hits in English for the boss, Zheng Xudong.

Yesterday (January 20), a number of investors net loan platform to the "Daily Economic News" reporter to reflect national clinical venture in Hangzhou, Shenzhen loan-letter invasive, Shanghai Feng Yi Shun vote online P2P lending platforms such as three recently Meanwhile collapse. Investors said the actual control of the company above three platforms are the same person, named Xu-Dong Zheng, Xu-Dong Zheng escaped and fled to Hong Kong after the current disappeared. Venture Hangzhou National Pro recently released announcements, Xu-Dong Zheng Pro for the country's actual control of the venture capital people.

In addition to these three platform companies, as well as being involved in the Chinese culture and Rueilong Property Exchange Trust Asset Management Limited. Reporters learned that the police in Shenzhen Loan A letter has been filed, the Hangzhou National Pro will soon venture into the filing process, and Shanghai Information Investment Feng Yi has not yet filed a timetable. For Xu-Dong Zheng whether actual control several other companies, along with the police for further investigation of this case, the answer is revealed, or will in the near future. Yesterday, reporters call the Hangzhou National Pro Ventures announced Xu-Dong Zheng's phone, but the phone was not connected.

P2P P2P platform collapse seems to have become a platform for the ultimate expression of investment risk. However, there is still relatively rare in the closure of three platforms at the same time. According to investors on the amount of funds above three platforms run by volume of at least 100 million yuan or more.

Gregory as bait to defraud

A "on a Chi Tak and Xu-Dong Zheng report suspected fraudulent fund-raising materials" shows Hangzhou National Pro VC (Hangzhou West House initiated the establishment of e-commerce Co., Ltd.) as the legal representative of Chi Tak, which is the actual controller or his friends Xu-Dong Zheng , opened in June 2013 "National Pro Ventures" Network P2P lending platform by "Shenzhen Rueilong Trust Asset Management Co., Ltd." on the loan contract 100% of principal and interest guarantee. High interest rates as bait, using the Internet for fund-raising activities targeting fraud without specific users, fraud amount of up to 30 million yuan or more.

At the same platform as the legal representative of the actual controller Chi Tak and Xu-Dong Zheng virtual borrowers with high interest monthly standard allegedly lured the victim to lend many venture capital investor Pro emerald beauties asset package intended to share mortgage standard, these funds go directly into the annals of German or Xu-Dong Zheng's personal account, by its illegal occupation.

"Daily Economic News" reporter yesterday noted from the Hangzhou National Pro Venture emergency notification website on the 16th sent the message, "Due to the effective control of the platform suddenly unable to contact people Xu-Dong Zheng, resulting in rupture of funds platform, resulting in a large number of investors can not withdraw cash. knowledge of the platform staff family members and friends a lot of money quilt Individually we will actively cooperate with relevant departments for investigation. immediate effect cease all prepaid platform and tender and other activities, please spread the investors. "Subsequently, the reporter call the Hangzhou National Pro Chong Investment hotline no answer.

Wang Ming (pseudonym) told reporters that he was the Provisional National Venture through Hangzhou, the official second group QQ group (group number: 26424836, which is now being canceled) understand the way the Hangzhou National Pro venture net loan platform. During the primary and the manager of the Hangzhou National Pro VC Chen Guohua, customer service, and Chen Ningning, who to contact customer service via the Hangzhou National Pro VC et al publicity, understand cultural property assets pledged standard package, referred to the text submitted marked a period of ranging from one month to four months, and have promised to protect the principal platform overdue advance, to ensure that the investor's financial security through the official website and staff to ensure the safety of funds and to encourage bidding. He then invested a total of $ 200,000, about 20% per annum, mainly for investment platform provides Chui package intended to share the beauties of assets pledged standard investment limit a month, two months, four months.

"I never expected that around 17 January 2014 platforms can not mention now, while its official website simply out of the emergency notification official website QQ group disappeared, website legal representative, general manager, operations, finance and all the staff, QQ cable, phone unable to connect, the site can not expire mention now. investors like me, there are about one thousand, distributed throughout the country. "Wang told reporters sigh.

Three platforms traced to collapse

Hangzhou National Pro VC investors told reporters after the investment in the platform, in addition to interest, there are certain incentives, a fund finally gain up to 40%. Almost at the same time, investors in mortgage letter Shenzhen Chong platform also told reporters that the platform around January 15 will not be able to cash up; Shanghai Feng Yi Shun voted investors also said that at around the 16th will not mention now.

Shanghai Feng Yi Shun Li Yang Investment Investors (a pseudonym) told reporters that he saw in the September 2013 letter about Feng Yi cast ads, then check the registration of the company, that the company pay all cooperation with the Chinese culture, it is more than a trust, the interest rate of the platform at about 20%, "It is understood that funds to finance major lending platforms such as artwork or restaurant demanders, but in January 15, it exposed the platform is Xu-Dong Zheng's One platform, then there is investor withdrawals can only mention a twenty thousand, January 16 some people went to the company, found that the company has closed. "

These three platforms in the company's investors have found an interview with reporters, Xu-Dong Zheng is the actual control of the three platforms. It also involves the Chinese culture and the Rueilong Property Exchange Trust Asset Management Limited.

In addition to the Hangzhou National Pro Ventures announced the Xu-Dong Zheng official website for actual control of the platform, but several other sites were not publish a statement. So, why investors agreed that the "disappeared" of Xu-Dong Zheng is above five companies control people?

According to the letter while the credit record, Mary Feng Yi Shun cast investments (a pseudonym) told reporters that she has invested one million yuan in the two platforms, the reason for investing in these two platforms at the same time, because before have friends in front Yi SII, and she knew the owner of the two companies is Xu-Dong Zheng.

Li Yang told reporters, director of operations at the platform, they can not withdraw cash to Shanghai Feng Yi Shun cast made a phone call, operations director Feng Yi letter also told them to vote for the boss Xu-Dong Zheng.

The police have been involved in cases

Meanwhile, the reporter also noted that the Internet, there are users post, said, "China's first net mortgage fraud" case exposure, "the primary responsibility Xu-Dong Zheng on January 16, 2014, Hong Kong has exit (Exit-Entry Administration Department has been verified), currently people in China, Hong Kong or turn on his country to be closed, ending at 13:00 on January 18, 2014, internal staff and the sites to be closed Comprehensive statistics: A letter of credit (75 million), Hangzhou National Pro VC (89 million), Shanghai Feng Yi (67 million), Wen Exchange (440 million). concerning the subject matter of the text submitted by Emerald, confirmed by the interior, all offering 10 Emerald subject matter and not made more than 50 pieces of jade products currently in the custody of the text submitted by the warehouse Please keep in front of people to come forward after a report by the public security and all the money goes all platforms Trust Company, a trust company is mainly responsible for human Zheng himself, surnamed Zhu finance their relatives. platform for all transactions related to mention removing all foreign cash into the trust funds Culture Exchange daily for gold, the text submitted by the issuing of the funds into the purchase of jade, etc. In addition to the subject matter, but has been diverted to other uses. "

According to investors on the above-mentioned "trust" refers to the Rueilong Trust Asset Management Limited, but these three platforms may not be swept away so much money, but also at least 100 million yuan or more.

Subsequently, the reporter call the company hotline number above its confirmation, no turn, provide investors with relevant contact phone companies are also three platforms were not called. Reporter access to websites of several companies public information found on the association's business does exist.

August 28, 2013, the Hangzhou National Pro Ventures announced that the House Commerce Co., Ltd. Hangzhou West and China Cultural Property Exchange formal cooperation, Hangzhou National Pro Venture Exchange to become China's first provincial-level cultural property agents, upcoming Offering art share of assets pledged standard package. According to the investor presentation, the mortgage and municipal agents Feng Yi is the Chinese cultural property exchange. The above three platforms signed a strategic cooperation agreement with Rueilong Trust.

For the relationship between several companies and investors to the "Daily Economic News" reporter, said Xu-Dong Zheng emerald in the name of investment, the establishment of the Chinese Cultural Property Exchange, the so-called top-emerald works by shares in exchanges of cultural property transactions. States also set up a temporary venture in Hangzhou, several P2P network investment platform, on the platform of high interest rates to attract investors' attention, and to raise a lot of money, and the money deposited in the so-called third-party "Shenzhen Rueilong Trust Asset Management Ltd. "hosted.

Yesterday, reporters at the Chinese Cultural Property Exchange Online noted that its announcement that: "Given the recent trend of each asset in the disk pack more extreme, to ensure the safety of funds investors, safeguard the interests of investors, we have decided with immediate effect to all listed Trading assets packets stop plate rectification and suspend all upcoming asset package listing plan. "

Yesterday reporters the company through several platforms seat Economic Investigation Team has learned that the police record the letter of credit in Shenzhen has opened investigations Hangzhou country is about to venture into the Pro filing process, and Shanghai Information Investment Feng Yi has not yet filed a timetable. With timely intervention police believe the relationship soon Xu-Dong Zheng and these companies will get to the bottom.

Credit risks of P2P networks

P2P network platform lending risk has always existed, why has someone become a victim of this risk? "Daily Economic News" reporter learned in the investigation, all investors are aware network platform is very risky, but no match for the temptation of high interest rates. Although some investors to determine the safety of the investment platform through the "micro test the water", but this trick does not seem loose.

Loan letter invasive, Shanghai Feng Yi invested nearly a million letters cast in Shenzhen Mary told reporters that she started it invested tens of thousands, as interest rates be honored, she will "brake car" and then put in nearly Wan. "Do not know how? Vietnam to end the more you want to vote, just head is filled with the same." Mary ruefully told reporters.

The above three net loan how qualitative platform event remains to be police intervention. But talking about the platform running, the industry also has an industry of "helpless." A P2P company who recently to the "Daily Economic News" reporter revealed that the current net loan want to do a large-scale platform, will raise funds to come in, but it is also a risk to the platform, once the funding needs can not be found on will result in idle funds. A large net loan company to raise a lot of money, in the case of capital requirements were not found even carried Basin investment.

Financial analysts, risk management division Dongxiu Sheng said that from the point of view of investors described above three P2P network platform may belong to self-prime financing platform, only dressed P2P coat. "Normal P2P platform for borrowers description is very clear, but also allow investors to easily generate a sense of trust."

In Mary appears that these new open net loan platform more secure, not so fast collapse, so she invested these two platform company. In this regard, Dongxiu Sheng clear: "In my opinion, relatively long duration, made more than two years and won venture capital, risk control team had net loan platform is relatively safe.

For P2P net loan industry, why risk frequent, Chinese microfinance League Secretary Bai Chengyu told reporters that in recent years the development of a larger non-formal relationship with the P2P platform. "Now these domestic lending platform P2P networks, there is a big risk that funding needs through pass-through trading websites are not paid directly with lenders if the parties to the transaction direct payments, these sites will be able to reduce risks, to avoid incidents on foot. Actual on the realization of investors and lenders direct payments is entirely possible. "But Bai Chengyu said that if customer funds without a net loan platform, the platform also unprofitable.

Bai Chengyu said that now is not the P2P network intermediary lending platform, a "network" version of private lending. So, investors want to engage in private lending, you have to consider carefully the individual must be prepared to take risks. "In this remind investors that, in this non-standard environment, the platform can be utilized once the net loan customer funds, it will allow criminals from taking advantage, so investors into a Ponzi scheme, so investors should be cautious to whom. "

Wenzhou SME Development Association president Zhou German think, P2P is the online credit and the credit itself is a high-risk industry, banks have various mechanisms to prevent risks, but still there will be so many non-performing loan ratio, the more risk on the network difficult to prevent. If you are offline, you are face to face, but also to investigate his information. On the network, P2P platform is easy to fake, the unit is easy to build a platform onto the illegal road. If not standardized, it will lead to bigger problems.

PBOC Intervenes to Halt Rate Increase in Advance of Holiday

June 2013: Inject ¥300 billion in one month
September 2013: Inject ¥290 billion in one day
December 2013: Inject ¥300 billion over three days
January 2014: Inject ¥255 billion in one day

Today's injection was on par with the one made last year around the time of Chinese New Year. Usually the PBOC waited longer to intervene. If the trust failure and cash crunch hangover from December are real issues, the PBOC will need to step in again before this month is out or early in February when business kicks off again.

PBOC injects RM123.2 billion through open market after rate spike
China's central bank will inject 255 billion yuan (RM123.2 billion) into the money markets through seven- and 21-day reverse bond repurchase agreements today, traders said, the largest single-day injection since February 2013.
The biggest was in September, but that move went down the memory hole because it came in advance of a potential cash crunch.


Broken Trust And Bursting Bubbles

From 2011:

Company Profile: Minmetals Grows an Arm
Days after Minmetals Ltd. was established, the Minmetals International Trust Co. Ltd. was officially opened in Qinghai Province. The trust will launch and oversee a mining capital fund, said Ren Zhufeng, General Manager of Minmetals Finance and Chairman of Minmetals International Trust Co. Ltd.

The Minmetals trust will perfect China Minmetals' financial services and become the company's capital platform, said Zhou.

Minmetals created its own trust products and lent to a real estate firm named Rong Teng (or Roten by Google Translate). I didn't find any info on the company from a quick search, except to get hits on this story. A lot of trust money went to real estate developers, and this one is unable to replay 400 million yuan in debt, about $67 million at today's exchange rate.

The amount isn't great, but this story is getting traction because it is a big state-owned firm. It is also a microcosm of the Chinese trust products and what went on from 2009 to 2012. Firms that were seeing their profits sink (such as commodities firms) built real estate or financial divisions which funneled money into real estate. I have been looking for these dominoes to fall for a couple of years, but the rise of shadow banking kept the real estate market humming. Are these looming trust failures a sign of a trend change?

Coverage of SOEs and private firms setting up real estate or financial divisions:
See NYTimes in 2010: State-Owned Bidders Fuel China’s Land Boom
This blog in 2012: Sinopec Sichuan sales office: King of the loan sharks? Usury scandal may be the tip of the iceberg
2011: Pop goes the Chinese real estate bubble
Also 2011: Rising costs destroy profit margins in Wenzhou, firms shift to real estate

Two Minmetals trust stories are below, Google Translated.

Today: Trust major: Minmetals 400 million helpless fallback "Roten Plan"
Still no results, Minmetals Land Trust and Shanghai Roten disputes into Rashomon. January 15, 2013, at 1200 Hongqiao Road, Shanghai First Intermediate People's Court 24 court, the two sides second court. Up to six hours in the original complaint, counterclaim, debates, surveys after the fact, the two sides remain deadlocked, the decision made by the Shanghai First Intermediate People's Court is the court mediation.

At issue is that after the early termination of the Trust Minmetals trust scheme, if there is still the subject of litigation qualifications; 400 million yuan of funds in the trust, the transferee Roten home of 250 million 60% stake in whether equity investments;, and breach of contract subject vest .

According to financial weekly newspaper reporter, Minmetals Land Trust and the Trust Scheme Roten was established in June 7, 2011, because of financing difficulties in the back section, Minmetals Trust in April last year with its own funds to achieve redemption. Since then, the two sides into a morass of complex litigation counterclaim.

Minmetals rigid payment

Two days before the hearing, Shanghai Rong Teng Properties Limited shareholders will be held, the parties to the negotiating table again, the registration of industrial and commercial home based Roten expired on December 31, 2013, the two sides will discuss whether the continuation of the company, but final result is Roten home dissolved.

"Because the full exercise of the powers of Minmetals trust 60% stake, the company finally went to the dissolution." Roten home side believes.

According to Trade and Industry Bureau and the Houses data show Roten Realty was founded in May 2003, the registered capital of only 12 million, the development of the qualification as "tentative", a small part of Songjiang local real estate developers, and financial weekly newspaper reporter combing found their qualification certificates as early as the end of 2011 had invalid business license is also on May 26 last year maturity.

Pursuant to the Trust roadshow materials, "Minmetals commercial real estate investment trust Roten Fund Trust Plan" period of 24 months, the scale of 400 million yuan trust (where a 212 million, two 188 million), the trust assets for the transferee Wing Proton buyers name "Winfoong Square" 3,4 of usufruct and a 60% stake.

Zengxin Terms Minmetals trust set up for this trust plan: to Roten's home "Winfoong Square" one, two shops mortgage, while 40% of home buyers with Roten equity pledge, and 60% equity interest in plans to Minmetals Trust's.

Nevertheless, the program has not as Minmetals wish, "Wing Fung Plaza in 2010 to now deal dismal sales price rose only 10 percent four years, although low, is still not sell." Winfoong Square is currently responsible for sales intermediary agency, told reporters. In fact, according Houses data show WINFOONG Square early in 2007 to get the pre-sale permit, but within the past seven years, but 40% of the number of sets sold, its price is far lower than the surrounding projects.

"There are very few businesses catering approach." Preceding the sales personnel. In view of this, Minmetals Trust on April 3 last year ahead of the end of the trust scheme, according to the financial weekly Minmetals Trust interview reply, the reason for the early termination of "multiple collections still refuses to pay, seriously affecting the Trust plans to implement , can cause the client gains achieved. "

In the same year on April 17, Minmetals Trust completed a one-time allocation of the trust principal and final phase of the plan trust income, and wound up market speculation that Minmetals Trust with its own funds or a third party to complete the payment.

20% of the financing costs

For external sources of funds for the payment of speculation, Minmetals trust in the court said it was "own funds" advance payment is intended to protect the interests of clients, as well as to avoid major social impact.

In this regard, East executives questioned a trust, because the real estate projects involving huge capital, trust company with its own funds paid in advance of the possibility of small, venture capital, etc. may be found to achieve long-term capital gains the right to the transferee. Minmetals Trust subsequent to the financial weekly interview reply also said that "coordination with other funding payment, the project currently has a collection of trusts into a single trust."

Since the beginning of April last year to complete the payment, Minmetals Trust plunged into a long road of recovery, it is understood, Minmetals Land Trust and Roten had reached a three-month extension agreed in early July last year, but Roten introduces home, agreed extension After Minmetals Trust immediately filed a lawsuit to the court in Songjiang month.

And the Shanghai First Intermediate People's Court, the parties still deadlocked, unlike in the Songjiang trial, defendant Roten home again, while counter-Minmetals early termination breach of trust, and request a refund of the Trust to raise fees, and "excess charge The income right. "

Money Weekly (micro-channel public number: moneyweek) reporter learned that, since its inception trust scheme, Roten buyers paid a total of 72,051,448.89 yuan to Minmetals trust funds, including 500 million penalty. Both sides of this part of the funds has been identified as a specific capital gains, that is paid to the principal and interest Minmetals Trust.

The Trust plans roadshow materials displayed, according to the different amounts of investment, investment income between 10.5% -13.5%, but Roten home in order to obtain this financing costs paid much more than that. Market environment shows that in recent years, regulators bundle strictly for real estate loans, such as small developers Xiangrong Teng difficult to obtain loans from banks.

In fact, Roten home in order to obtain this financing, the actual payments to Minmetals trust financing costs up to 20%, "the two sides agreed on the rate of return of 20% in the contract, the higher part of the investment income is based on the trust of people costs and labor are fixed. "trusts Minmetals introduction.

For 20% of the cost of the aforementioned trust executives believe that high, generally less than 15% of the market price, the case of a trust company and financiers have become too radical.

Despite the early termination of the Trust, Roten home still paid 67.05 million yuan income paid to Minmetals Trust. However, 400 million yuan to repay the principal issues in addition, the two sides failed to agree always, after six hours of trial, the court announced the case goes to court mediation.

150 000 000 or 400 000 000

So far things evolve, Minmetals Land Trust and Roten into mutual accusations of Rashomon.

Which trust scheme for product design, the aforementioned Trust senior admitted that although stocks plus bonds designed to avoid the regulatory red line, but its 250 million yuan transferee a 60% stake, and project a 40% stake, two charges, plans to complete and then return the stake design is too complex, the impact of post-operation.

This design also proved to recover assets of the Trust Minmetals adversely. Although the contract has indicated that plans to end the full year and a half earlier, but in a trial in the hospital, Roten home to become masters, think ahead of the end of the program defaults Minmetals, after completion of the program, there is no trust relationship between the two sides, so Roten requirements Minmetals refund the cost of 16.22 million yuan to raise trust and scoping repay 1.5 billion.

Roten's view is that the trust funds of $ 400 million, and 150 million yuan of revenue for the right to acquire 3,4 Winfoong Square, 250 million yuan for the transferee a 60% stake, which belongs equity investment 250 million yuan, It is also because Minmetals Trust insisted at the beginning of the shareholders will not continue operating in Roten, which was caught in the dissolution of the state, the exercise of shareholders' rights performance.

"250 million yuan to acquire a 60% equity considerations of security and increase trust." Minmetals said. It is understood that 60% of the equity is held by former shareholders Yangzhai Roten sisters, but for 250 million yuan is paid in full to Yangzhai sisters, the two sides dispute no less.

In this regard, the aforementioned trust executives believe that the prevalence of early termination plans, trust companies usually requires six months before the expiration of financing party to pay principal and interest, but the termination of the legal or not, need to see the specific contract and liquidation. In fact, Roten in court repeatedly asked Minmetals Land Trust to produce a liquidation report, no response is received.

For the treatment and progress of the case, said Minmetals trust in the judicial process before the end of the inconvenience to disclose any details. "Trust is actually a real estate fund investors in real estate development, real estate development and a greater risk of loss is normal, but the circle of trust has been a rigid payment unspoken rules." Trust senior foregoing description.

For the kind of legal risk "specific assets usufruct Trust", the China Banking Regulatory Commission had proposed regulatory text bipartite who pointed out that although the current laws and regulations do not explicitly prohibited, but the transaction is still a lack of clear legal provisions to support, to carry out such operations if trust not careful, it will be difficult to obtain regulatory support, and may even be restricted.

It seems that Minmetals Trust 400 million yuan of assets recovery road will continue to be road resistance and long.

Roten Minmetals Land Trust 400 million inability to repay debts or the entire purchase Trust
Shanghai Rong Teng Properties Limited (hereinafter referred to as "Roten Land") in mid-2011 through the establishment of trust products borrowing 400 million yuan, when the plan trust products will soon expire, but unable to repay the loans.

"East Real Estate Business Weekly" (hereinafter referred to as "" East real estate "") in an interview that currently issuer Minmetals Trust Trust Trust has been ahead of the end of the program. Insiders revealed that Minmetals trust or use their own funds to honor the project, or to find a way to acquire disk access.

Whether home on Roten inability to pay debts, "East real estate" contacted the general manager of Minmetals Tang Ji Trust Integrated Management Department. Tang Ji did not admit or deny this news, but said, "Minmetals Trust maximize the protection of the interests of investors, as there is no obligation to disclose other details."

$ 400 million in arrears

Roten Realty Trust to borrow this product called "Minmetals Trust - Roten Commercial Real Estate Investment Fund Trust Scheme (Phase 1)", was established in June 7, 2011, a total of 400 million borrowers in two phases million.

Roadshow material shows that the product is the use of funds under the name of the transferee Roten home "Winfoong Square" 3,4 of usufruct and a 60% stake, plans to add value to the trust property, and as a source of trust benefits, according to the terms of the trust document distribution trust benefits to beneficiaries.

As a guarantee, Roten's home "Winfoong Square" one, two shops were pledged to Minmetals Trust, to assess the price of about 1.133 billion yuan; while also accompanied by "Winfoong Square" three, four future sales back of approximately 584 million yuan, 40 percent of home equity Roten pledge, transfer of 60% equity transferred to Minmetals Trust name.

Roadshow information, Minmetals believers will expire in June before Trust Plan Review Roten home repayment of funds, such as when the trust funds are insufficient to repay maturing principal and income, Minmetals Trust will supervise one, two projects Retail sales in order to secure the repayment of funds.

According to informed sources declined to be named said, is when they fall due before the six-month review, Minmetals trust for repayment of funds Roten home of a rigorous examination, found Roten buyers can not afford to repay borrowings Therefore only the early termination of the trust scheme.

April 3, 2013, Minmetals Trust Company website released a "Roten commercial real estate investment fund trust scheme ended early announcement", which means that to fully protect the interests of the client, according to the contract, was April 3, 2013 early termination of the Trust Scheme.

"The Trust Scheme principal and final phase of the trust income in April 2013 after a one-time 3 10 working days allocated to the beneficiary and the Company as the trustee of the trust scheme, will maximize the benefits to the beneficiaries goals, in strict accordance with the trust agreement document carefully deal with the affairs of the trust scheme. "trusts Minmetals said.

The source said Minmetals Trust should have two payment methods, one with its own funds paid in advance; Second, find the disk access party acquired the project.

"It is said that the company is acquired." Wealth manager with Beneficial Trust Network 廖鹤凯 of "East real estate," said.

"East real estate" tried to contact Roten home, leaving the company in the online contact information up to nearly 10 species, but no one answered the phone.

Trust or the entire purchase

Prior to this incident, Roten home as a small-scale developers, is a relatively unfamiliar name.

Shanghai Industry and Commerce Bureau Web site information, Roten Realty was founded in 2003 with registered capital of 12 million. Legal representative called Ma Jianjun.

Public information, Roten Realty Trust's project is currently the only product roadshow material mentioned in the "Winfoong shopping and leisure."

WINFOONG leisure shopping center located in Songjiang District, planning a total area of ​​about 60,000 square meters, total construction area of ​​over 190,000 square meters, including 70,000 square meters of residential and commercial as well as 30,000 square meters of commercial 90,000 square meters of live.

WINFOONG leisure and shopping center sales ineffective perhaps Roten home to repay his debts most important reason.

Online real estate information display, leisure and shopping center made Winfoong sale permit in 2006, the total number of sets 259 sets.

In the past six years, sales of the project is very bleak, and sold a total of 58 sets of shops, sold only a full-year 2012.

Minmetals Trust in advance of the end of the trust scheme and Roten after things have a dramatic scene took place. With policy advice provided to the research center "East real estate," the data show, this year May 24 consecutive days on the 25th, Winfoong leisure shopping blitz turnover reached 200 units, the average transaction price is 9912 yuan / square meter, far lower At the price of other shops in the area. This price is equivalent to seven years ago or even just shopping and leisure Winfoong first transaction price.

Although it is cheap deal, but according to the turnover of the area 61,073 square meters rough estimate, the total amount of turnover reached 605 million yuan.

"It should be the overall acquisition, at this point, just to help pay off debt Roten." Insiders, who asked not to be named, analysis.

Risk aversion

Case developers unable to repay loans trust, Roten home is not the first.

It is reported that Sichuan Trust issued a called "Kingdom Real Estate Investment income right project-specific Capital Trust scheme" trust products to the Kingdom Zhoushan Ocean City Properties Limited issued 100 million yuan of trust loans, Ocean City Kingdom are unable to repay loans. After the disc has received more than 100 million provided by a trust fund to honor projects to undertake a trust loans and mortgage debt and to restructure the party identity and developers involved in the negotiations.

The rapid development of the real estate trust has brought concerns about payment crisis. But the industry view, the risk can not be predicted in advance preventive measures to protect the rights and interests of investors.

"Trust Business development faster, more social concern, the risk of the project, in fact, is the problem of social credit system construction, for example, some people just are not good faith cooperation projects, on foot, and that trust in what ways . "Tang Ji believes that once the payment risk, trust should go to face.

Tang Ji said, trust careful selection of partners, the first will look at the other side of the adequacy of collateral:. "For example, even a small developer, collateral adequacy, liquidity is strong, and their cooperation will trust."

Research Trust, former general manager of Xinhua Xue Tao believes that trust is very strict examination, the likelihood of a substantial risk is unlikely: "Like Roten this case, the developer may be a problem with liquidity in general trust. will go to promptly deal with the problem, to deal with its own funds, or find their own company then set. "

As for how to avoid risks, Xue Tao gives his advice. "Qualification is just one of the factors investigated whether the project is good or bad, and we do a project before, will do a detailed review of the project to ensure that the company's financial clean, no mortgage debt and the legacy of our own funds but also to manage, Well, who lived assets and tubes that take control of risk. "

He believes that the crisis in the real estate trust has been honored in the past: "In the past influenced policy, mortgage real estate sold, bringing insufficient funds, but now the situation has improved, the market recovery is hard to tell what the future, or to see. How to develop the real estate market. "

"2011 was the hottest time of the real estate trust, said before 2013, 2013 to honor certainly a problem, but now, the situation is not much fundamental problems, there are ways to risk their resolve of." Tang Ji added.