While the G-Series are popular with global investors, the Chinese Communist Party’s (CCP) domestic investment field is mourning. A few days ago, the Penghua Fund Juxin series of (wealth investment) products defaulted more than 4 billion, although the news published recently (https://dy.163.com/article/FPDMPUTV0519H1CT.html), Penghua Fund has been unable to pay since July this year.
Since the Pan-Asia Ezubao ransacked hundreds of thousands of investors, the CCP’s financial breaking events had happened frequently. But as a fixed income product with an expected interest of 4.1%, its issuer “Penghua Asset” is also a subsidiary of the “Penghua Fund” who in the top rank of public raised funds in China. Plus it is also selling through ICBC, a bank who is the first market capitalisation in China. Considering such a reassuring wealth investment product cannot be paid on time, people has to ask what is hell going on?
According to media exposure, the “Penghua Juxin series” sales in rolling for six months with a minimum one million investment. The “sales in rolling” is actually to borrow new money to pay off old debts, take money out of the left pockets of these wealthy people and then return them to their right pockets. Also, Penghua Juxin series has a total of 28 products, according to its original plan, maybe it’s enough to move around with its money in the fund pool. However, they cannot pay on time because of its large purchase of HNA (Hainan Airline) bonds, even the payment has delayed twice. Finally, Penghua Fund have to announce that they cannot pay off.
The reason analysed in the news is the so-called “term misdistribution. ” Frankly say, it means that the new money borrowed cannot pay off the old debt. But in my opinion, perhaps this is a trap, it was kleptocrats of HNA who stole money from the pockets of these high-net-worth middle-class people and then ended up with the bill paid by the state and the people in China.
This fund is involved in one of the two main players, which is Penghua Asset. Penghua Asset was established in 2013, whose holding company is Penghua Fund, and Penghua Fund’s largest shareholder is Guosen Securities, accounting for 50% of the shares. As a result, Penghua’s actual controller should be Guosen Securities. The suicide of Chen Hongqiao, the former president of Guosen Securities, was an event that caused great concern in the country. Chen Hongqiao worked for Zhang Yujun as a deputy. Zhang Yujun was a former assistant to the chairman of the SFRC (China Securities Regulatory Commission). Zhang Yujun was removed from office in September 2015 after being investigated by the CCDI (Central Commission for Discipline Inspection) and Chen Hongqiao killed himself at his home on October 23rd, leaving a note with only several words on it: “Do not disturb my wife and children”. It is well known that Wang Qishan became the secretary of the Central Commission for Discipline Inspection after the 18th National Congress of the CCP, and carried out a major clean-up in the securities industry under the name of anti-corruption. I believe that Guosen Securities also been taken off by his team. Chen Hongqiao was just threw out to be a scapegoat. He killed himself and became ghost under Wang Qishan’s knife maybe because the CCP threatening his family.
Under such a background, it is not difficult to understand why Penghua Juxin series of wealth investment product is not the allocation of assets from different subjects to distribute the risk, but high percent of investment assets that largely brought from HNA bonds. Wang Qishan and Chen Feng just repacked HNA’s trash and stuffed into Penghua’s assets.
Another main player involved is ICBC. Due to the issue of Penghua assets Juxin series, the current related disposal payment will be carried out by ICBC. ICBC will pay 50% of the product on October 20 of 2020, and the remaining 50% will be transferred to ICBC’s other wealth management products for a one-year deferred payment. This is a game of drumming and passing the parcel, but it is believed that the vast majority of investors in such a difficult situation, will eventually have to choose this solution.
However, as a sales agency why does ICBC have to carry this black pot? On one reason, it may be a legal problem. On another hand, it should also be under Wang Qishan’s control although ICBC doesn’t belong to Wang Qishan completely, unlike China Construction Bank and Bank of China. After the 19th National Congress of CCP, Wang Qishan ostensibly withdrew from the core of power, but Zhou Liang, one of his most hardcore horses, went to the CBRC (China Banking Regulatory Commission) as vice-chairman. As a result, his control over the financial sector in communist China has not been weakened. That is why the bank of the CCP continued to lend money to HNA, despite its ability to cheat money overseas had been cut off completely by Mr Guo’s whistle blow in 2017. Among the 4 billion loans led by China Development Bank in 2019, ICBC was also present.
Through a series of covert operations described above, HNA’s junk assets were sold to Penghua Assets, and then packaged into fixed income type of wealth investment products and then have ICBC paid off its unpaid debts, but in fact, thousands of ordinary Chinese people paid off these bills. This is the ugly face of the kleptocrats.
In the CCP’s fake economy, from the real estate to the stock market, from P2P products to the digital currency, the Communist kleptocrats have harvested the leeks one after another. Now, with the collapse of a local bank in Communist China, they begin to play the idea of bank-based wealth investment products in fixed interest rate. I believe that in the coming days, such financial explosions events will increasingly happen. I just want to remind my fellow Chinese, cover your money pocket well, you may just want to earn some interest, but the kleptocrats want your principal.
(The article only represents author’s own opinion)