Wealth management products

Interview with George Soros

Billionaire investor George Soros speaks at the World Economic Forum in Davos. Photo: EPA

t is going to be a very difficult transformation, because the household consumption is only 1/3 of the Chinese economy. Exports and investments are 2/3. The growth of 1/3 cannot make up for the slower growth in the 2/3. Therefore, the overall growth rate will have to be significantly slower than it has been up to now. That is a very important point.

Monday, 8 April, 2013, 3:58pm 5 comments

South Sea Bubble warning for wealth management investors

South Sea Bubble warning for wealth management investors

In his classic Memoirs of Extraordinary Popular Delusions and the Madness of Crowds, Charles Mackay detailed some of the investment absurdities of London's South Sea Bubble of 1720.

In one case, the prospectus for an initial public offering described simply "a company for carrying on an undertaking of great advantage, but nobody to know what it is".

13 Mar 2013 - 4:41am 5 comments

New dangers lurk in trust firms' rush to finance

Bank of China president Xiao Gang. Photo: Bloomberg

A new financial danger is emerging on the mainland, with dozens of under-regulated trust companies channelling funds from clients and bank wealth management products into a range of capital-hungry companies and overexposed local government financing vehicles.

18 Feb 2013 - 3:54am

The black hole that is wealth management products

Xiao Gang, Bank of China president. Photo: Bloomberg

Wealth management products are becoming the object of suspicion and worry on the mainland. Investors have little idea where the money they put into these products ends up.

14 Feb 2013 - 4:53am

Scandals set off watchdog warnings

A former deputy head of a Shanghai Pudong Development Bank branch in Zhengzhou allegedly used 6.4 billion yuan in depositors' money to fund loan-sharking schemes. Photo: Bloomberg

Shanghai's banking regulator has told lenders to set up telephone hotlines for complaints about staff misconduct in selling wealth management products.

The move is seen as a gesture towards protecting consumer rights after a slew of irregularities in the banking sector.

25 Jan 2013 - 4:56am

Beijing can't afford to rein in the shadow financing system

Power play

According to mainland media reports, Beijing has set this year's quota for new bank loans at nine trillion yuan (HK$11.11 trillion).

Now, nine trillion yuan sounds like a lot of money. Certainly it's more than the 8.2 trillion yuan in new local currency loans Chinese banks made last year.

24 Jan 2013 - 5:30am

Mainland banks face mounting loan dangers

Mainland banks face mounting loan dangers

The mainland banking sector is said to be facing increasing risks from problematic loans and off-balance-sheet businesses, leaving regulators a daunting task in the future.

The top priority of the China Banking Regulatory Commission (CBRC) this year is to prevent "systematic risk" and "regional risk", the regulator said at its annual work meeting on Monday.

16 Jan 2013 - 3:41am

Banking regulator warns about wealth management products

A failed wealth management product sold at Huaxia Bank has sparked calls for better supervision of bank outlets. Photo: Reuters

The banking regulator has told mainland lenders to "strictly" supervise the design, sale and investment of their wealth management products as it seeks to curb risks from banks' off-balance-sheet businesses.

15 Jan 2013 - 4:15am

Carlyle's exit prompts sell-down in insurance stocks

Mainland insurers fell in Hong Kong and Shanghai yesterday, led by Ping An Insurance and China Pacific Insurance, as investors rushed to cash out from a sector that was seen as overbought in the recent rally.

9 Jan 2013 - 4:08am

Failed wealth fund raises mainland alarm over banks

A failed wealth management product sold at Huaxia Bank has sparked calls for better supervision of bank outlets. Photo: SCMP

Those who complain of an overregulated banking system on the mainland and heavy-handed intervention by the government in lenders' business operations were recently given reason to rethink their conclusions.

The default of a wealth management product issued by a branch of Huaxia Bank in Shanghai's Jiading district exposed the lax management and supervision of banking outlets.

4 Jan 2013 - 2:48am

Loose credit policy increases risk in China, Nomura warns

Huaxia's case is 'just the beginning'. Photo: Bloomberg

Risks were accumulating in the mainland's trust loans and wealth management products, with more scandals like that of Huaxia Bank expected to emerge next year, a top economist at Nomura Securities said.

14 Dec 2012 - 4:43am

China's boom in wealth management products makes economists fear

A Huaxia Bank branch, like this one in Beijing, came under national spotlight after an employee promoted a WMP. Photo: Bloomberg

The mainland's smaller banks boosted sales of wealth management products (WMPs) to account for more than 85 per cent of the 3.5 trillion yuan (HK$4.34 trillion) of offerings in the first nine months of this year, raising credit risks and deposit costs, Fitch Ratings said.

13 Dec 2012 - 5:25am

Fitch: China life insurance premium income growth limited

Fitch has a stable outlook for insurers' profitability.

Mainland life insurers' premium income growth would continue to be limited as a result of lower returns to policyholders due to weak stock markets and rising competition from banks, Fitch Ratings said yesterday.

11 Dec 2012 - 2:55am

Huaxia scandal spotlights China's Ponzi crisis

Huaxia Bank comes into the spotlight after depositors claim its staff are aggressively selling risky WMPs at a Shanghai branch. Photo: Reuters

It is an all-too-familiar tale. Depositors trust a bank with their cash in the hope their wealth will be managed well, only to find that the money has evaporated at the end of the agreed term.

10 Dec 2012 - 3:32am

Selling credit risk to bank depositors is a lousy idea

For the past five years, banks there have been aggressively selling their customers things called "wealth management products".

Three years ago in December 2009 Monitor warned it was a dangerous move for mainland banks to sell credit risk to their depositors.

Now they may be about to find out for themselves just how dangerous.

7 Dec 2012 - 3:23am 1 comment