Remember CDOs? Murky, illiquid investments, backed by bulge-bracket firms that offered lots of yield over similar-rated corporates – just don’t ask questions. As SCMP’s Shirley Yam reports,China’s so-called “trust” products, promise high returns with big-name backing, but a scheme touted at Ping An Bank highlights just how murky the world of mainland investment offerings is. After reading this, we suspect, that last trace of faith that the PBOC has the Chinese shadow banking system under control (and a growth renaissance is due any moment) will be eviscerated.
As SCMP’s Shirley Yam reports, last year, a sales staffer at Ping An Bank, emailed him an investment proposal titled Ping An Wealth – Handan Hyundai Modern Logistic Port Project.
Hyundai? The South Korean conglomerate? That’s interesting.
George clicked on the e-mail to find a trust scheme that promised a fixed annual return of 9 per cent to 11 per cent over two years. It was looking for a total investment of 1.2 billion yuan (HK$1.5 billion).
The scheme looked real.
The proposal said the project involved an investment by Hyundai RNC Investment, which was fully owned by Hyundai Engineering and Construction (Hyundai E&C) – an arm of Hyundai Group.
Hyundai RNC guaranteed repayment with cash flow from Hyundai (Handan) International Auto Trade City, a US$1 billion project that included apartments, offices and hotels, according to the proposal seen by Money Matters.
It said Ping An Trust, one of the industry’s key players, managed the productwith a long list of risk-control measures. The proposal bears the logo of Ping An Trust.
It looks even more real if you search for the project online in Chinese. In July 2012, Xinhua reported the investment “by Fortune 500 corporation Korea Hyundai Group”.
In the official media of Hebei province, where the project is located, there have been lots of reports and pictures of the investment. Among them is the Hebei government making Hyundai RNC’s chairman an “honorary citizen”.
On YouTube, a video shows Hebei officials meeting some Koreans who are said to be key Hyundai personnel. There is also a website for the project, which is described as an investment of Hyundai E&C.
