If you look at Zhongrong's problem as an independent event, you will most likely not find any very useful information.
Because after all, the news that can be directly related to the outcome of the Zhongrong problem is just a few words.
Trying to deduce the whole picture of this matter from such a scarce sample of information is like inferring the vastness of the sea from a bowl of kelp soup.
There are discoveries, but not much.
But if you look at it as part of a macro event, you will have a good chance of finding the true direction of the event from some seemingly completely unrelated information.
In fact, for such a long time, most of my later confirmed opinions have been unearthed little by little from various public news events.
Actually, if you want to say that the structure of Zhongrong is not complicated, it is nothing more than a few big variables.
And the biggest thing is the attitude of the government, which no one should deny, right? On any officially certified **, the nature of Zhongrong is a real state-owned holding.
With the blessing of the identity of a state-owned enterprise, it basically means that Zhongrong cannot die so inexplicably.
In fact, since 2000, state-owned enterprises have been bearing unlimited joint and several liability, although the name is written "**, but do you really see which state-owned enterprise" is "limited"?
Even if you have to quit if you don't manage well, then you have to have an official daddy come out and wipe your ass clean.
Not to mention the 18-year P2P thunderstorm is the same as firecrackers, the only two that have completed the orderly exit are the two state-owned enterprises, and the others are all chicken feathers.
Let's not talk about the superiority of state-owned enterprises here, but at least from a historical point of view, the identity of state-owned enterprises is itself a guarantee of credit.
And the second is the coverage of the underlying assets, the bears next door have always been talking about this, three folds today and two folds tomorrow. Today's storm, tomorrow's lightning and thunder, to be honest, I don't know this statement, I think this buddy's profession is weather forecasting.
The meteorological noun is used for this slip.
However, let's get back to the basics, how much value the underlying asset is currently in fact a mystery, as its authenticity cannot be verified through publicly available information.
But by analyzing some publicly available data, we can still make some inferences. For example, I have used previous financial reporting data to make a preliminary estimate that the value of the underlying asset is at least between 70% and 85% of its nominal value, and perhaps even higher. After all, without the support of stable cash flow, it is impossible for Zhongrong to maintain normal operations during the years when its assets under management have been shrinking.
It's like if you have a mortgage of 10,000 and a monthly salary of 8,000, if you don't have other income**, you would have starved to death, and this logic itself is not difficult to understand.
But even if the underlying assets can be covered by the book, there will be problems when dealing with them.
After all, the goods are cheap and hurt the farmers, so many of your assets are directly put on the market to sell, whether there is someone to take over is one thing, and what to use to take over is another thing.
At present, it seems unrealistic to expect private enterprises to take over these assets. Considering the current economic environment, many private enterprises are struggling to maintain themselves and obviously do not have the spare capacity to take over these assets. In addition, pricing is also a tricky issue. Although it always fluctuates around value, this fluctuation is greatly influenced by the supply and demand of the market. Too high will be hard for buyers to find, too low may lead to depreciation of the asset.
Asset depreciation could have a direct impact on the financial system as a whole, and if it were to trigger a wave of bankruptcies among small and medium-sized enterprises, the consequences would be devastating.
Speaking of which, some friends may be asking again.
Isn't it just dealing with some non-performing assets, and how can it be involved in the bankruptcy of small and medium-sized enterprises? ”
In fact, in the process of economic development, assets** play a crucial anchor role.
This is reflected in the fact that the stability of asset values has a fundamental impact on the healthy development of the economy.
However, when large-scale assets are disposed of at a discount, this will undoubtedly have an impact on the stability of the asset**, thus forcing the relevant economies to replan and reposition the anchor of their economic development.
This adjustment process not only involves a re-evaluation of asset values, but may also trigger a broader economic restructuring to adapt to the new realities of economic development.
Therefore, it is of great significance for economic decision-makers to understand and properly deal with the impact of asset discount disposal to maintain economic stability and promote economic development.
To use a simple analogy, if the house next door to your house is auctioned at a 4% discount, can your house still be sold at the original price?
There is a high probability that no, if you can sell it for 6% off, it will already be a 50% premium higher than the foreclosure house next door to your house.
It's the same with other assets.
If these underlying assets held by Zhongrong are discounted, will it objectively affect the assets of the whole country?
And once the anchor point of the asset changes, will the fairness of the property mortgaged by the bank not change?
When the bank's collateral is insufficient, it will either ask the lender to replenish the collateral or ask it to repay the loan early.
But it has reached the point where you need to mortgage the property, and you still have money to repay the loan early?
Bank lending is the lifeline of small and medium-sized enterprises, but if they do not do so, the risk of asset impairment will accumulate in the banking system, which will drag down the normal operation of banks.
If such a thing happens on a large scale, then I don't need to say more about the follow-up questions.
This is the so-called systemic financial risk.
Therefore, the core of ensuring that there is no systemic financial risk is to maintain the quality of the entire asset, so even if Zhongrong's assets are to be dealt with in a market-oriented and legalized way, it cannot be the "free marketization" that everyone understands.
Therefore, the so-called three-percent coverage is completely impossible.
And at present, there is a high probability that this part of the assets will be unified through AMC institutions for three reasons.
First, at present, there are only AMC institutions in China that have the ability to digest such large-scale assets in batches, and the others are not very likely to be strong or courageous.
Moreover, I don't know if you have noticed, since Governor Pan's speech in October named Zhongrong, all the subsequent documents emphasizing risks have uniformly said small and medium-sized financial institutions.
This category does not specifically refer to the trust industry, but includes some smaller banks, after all, most of the mortgage assets in China's banking industry are real estate and land, once the assets ** decline. The impact is almost immeasurable.
Second, these state-owned AMC institutions have always had a tradition of taking over for the country, in fact, in 1999, there were four newly established AMC institutions, which took over the four major banks of industry and agriculture and China Construction with a total of 17 trillion non-performing assets, and it is such an action that will bring about rapid development in the next 20 years.
Third, if you pay attention to the actions of these four major AMC institutions recently, you will find that the status of Dongfang, Great Wall, and Cinda is being upgraded, which was originally under the management of the Ministry of Finance, but now belongs to the China Investment Corporation, which is directly managed by the State Council.
Although such a move may not be to reduce the financing cost of AMC, it does objectively reduce the long-term financing cost of AMC institutions.
Low financing costs, strong credit endorsement, and the strategic determination to hold assets for a long time, it is actually the most convenient and rapid response plan to take over the risk assets of small and medium-sized economic and financial institutions through AMC.