-written by Shiqi-
Frozen bank deposit issues in China have lost heat, but there have been no practical solutions so far.
Customers from four rural banks in Henan and Anhui, the two provinces of North China, could not access their deposits for months until May. It turned out that these banks attracted money primarily through online channels and used it for illegal financial activities. With interest rates above the industrial average, their financial products have collected over 40 billion yuan ($5.88 b) from more than 400,000 people around the country. They played with loopholes in the Chinese financial system and opened Chenyu information technology company to delete and falsify the financial data. The news has shocked the public and reminded us of fintech risks again.
However, there are no effective solutions for their customers so far. Banks will send payments to customers who deposited less than 50,000 yuan. They have not provided any plans for customers with deposits of more than 50,000 yuan now. However, banks will not refund money to those who signed problematic contracts or invested through illegal channels.
Besides, it is not the first time to have significant financial crimes in Henan province. At the end of 2020, Yongmei Group, a Henan enterprise in the coal mining industry, could not pay the principal and interest for their bonds on time. Similarly, Yongmei Group tampered with data on the financial report and also had a high credit risk.
And we know what happened with Evergrande ($EGRNF). Disasters. With customers refusing to pay mortgages, it’s not matter of if but when things will get worse and it will impact the entire financial systems.
We don’t have enough information as CCP guards and censors news but only one can imagine what will happen if the dominoes starts falling like it did with Lehman in the US. Developers, then lenders / banks, then suppliers, then the whole customer sentiment, then defaults and bankruptcies by consumers and the vicious cycle starts.
In conclusion, it is not the right time to bullish the Chinese market, especially the financial industry. The price of $YINN will go down more in both the short term and long term. Although global funds bet on Chinese stocks, it is not a good time to invest in these region funds. Maybe the right think to do is bet on $YANG (Direxion Bear) or someone of the funds below. Or just wait until they hit the bottom and scoop them up.
Below are some US funds invest in Chinese stock market. (Most of them are not doing well this year)
- BlackRock China A Opportunities Fund. ($CHKLX)
- Matthews China Small Companies Fund. ($MCSMX)
- abrdn China A Share Equity. ($GOPIX)
- Oberweis China Opportunities Fund. ($OBCHX)
- Matthews China Dividend Fund. ($MCDFX)
- Goldman Sachs China Equity Fund. ($GSAGX)
Do your own DD before making any investment decisions.