Rich, cut off

Ryobo Kogi

2024-04-25 18:10Posted in Hubei real estate creators

Sentence / Kogi

In the past two months, what happened shook me a little.

The owner of the asset management company, which had assets of more than 40 billion yuan, cried to me that the house had been forced to be auctioned, and the private equity boss with a management scale of about 5 billion yuan borrowed 200,000 yuan from me......

The recession of the industry and the heavy-handed supervision of policies have made these social elites who were once the most profitable fall into the world.

I thought that the situation had subsided, but the recent Ping An Trust thunderstorm incident once again sounded the alarm in the financial market, and the raging fire rose upward, pulling the people standing in the pyramid of social wealth to the abyss together.

According to incomplete statistics, China's financial market has experienced a thunderstorm in the past year, and the amount of wealth evaporated has reached 7.8 trillion yuan, which is equivalent to the total wealth created by tens of millions of South Koreans in a year.

This is also a huge blow to the high-net-worth individuals in society.

So where did all this money go? What is the connection between finance, banks and real estate?

01

In fact, in most people's cognition, the path of making money is nothing more than saving in a bank, buying a house, speculating in stocks, bonds, funds, ......

However, for wealthy people with relatively strong financial strength, these ways to make money are too troublesome, and it is better to find asset management and trust than to spend time and energy.

Asset management and trust can be said to be the last stop for rich people to pursue money and make money.

In particular, the assets behind the trust are rich and rival the country, and in 2023, the scale of the mainland trust assets will reach 22.64 trillion, which is a game played by the purely rich.

When the concept of trust was first introduced from abroad, everyone was not used to it, because the number of assets under management was huge, and once there was a problem, the risk would affect all walks of life.

Therefore, the China Banking and Insurance Regulatory Commission is very cautious and invented a "license", which only allows some institutions with large funds that have passed the review to engage in trust behavior. The minimum amount is 300 million RMB.

Moreover, it can only be sold to high-net-worth customers, with a minimum investment amount of 1 million yuan, and cannot be publicly promoted (advertised).

Because of the supervision of the China Banking and Insurance Regulatory Commission and the endorsement of the license, trust products have risen rapidly in China, but they are different from foreign customers looking for institutions.

The domestic logic is the opposite, it is the trust company that first goes to the market to find those good projects, through a series of investigations, feels that the project is good, will turn around, package the project into a trust product, and go to the market to raise funds.

The problem is, trust institutions can't publicize publicly, so how to reach customers?

At this time, another important role came into play, and it was the well-known bank.

Banks are very willing to cooperate with trust institutions:

On the one hand, you can be a middleman to make the difference.

The income of bank wealth management is 3-5%, and the income of trust wealth management products is 7-9%, and high-net-worth people prefer to buy trusts, but they need to pay an issuance fee to buy a trust in the bank, that is, a management fee, so that they can make a lot of money with customers.

On the other hand, there are more channels for money.

Banks wholesale trust products back, and then through the shell, and then retail to different levels of customers, in addition to pure capital guaranteed wealth management products, customers can find out the actual investment direction of bank wealth management from the wealth management product manual.

Generally speaking, about 70% of them are connected trusts, and the remaining 30% are invested in bonds, money market funds, large certificates of deposit, etc.

As a result, banks and trust institutions have joined forces to become popular in the financial market, and have mastered the wealth assets of countless wealthy people.

Of course, in its heyday, the rich were unsuspecting about trusts, so to speak.

Because the bank account manager will say, this is a license given by the China Banking and Insurance Regulatory Commission, and those who can do trust business are all super enterprises, with strong assets below, in case something really happens, so much collateral is not enough to repay your money?

As soon as the customer looked at the qualification and endorsement, as well as the bank platform, and then looked at the "stable" yield of 7-9%, he hurriedly entered the bank card password and bought!

In fact, what everyone doesn't know is that after the trust institution gets so much money, it is a headache.

In addition to paying customers 7-9% of the financial income, we also have to pay salaries to employees, pay commissions to banks, pay dividends to shareholders, and give bosses to find girls in the clubhouse.

So in the past two decades, in the Chinese market, the only industry that can eat so much currency and generate huge profits may be the only one industry left:

Real estate.

02

Over the years, trusts have been one of the main channels for developers to get money.

After the developer gets the money from the trust, he immediately auctions the land, builds a sales office, and sells off-plan properties. As soon as the house is sold out, the funds are in place, and the developer begins to distribute the profits.

Pay back the money from the bank and trust first, and the rest is yourself and the upstream and downstream.

The trust lends money to the developer, and the interest is calculated on a daily basis, and the interest amount is amazing, so the developer must use the trust money to the shorter the time period, the better.

Therefore, it is understandable why during the prosperous period of the property market, most developers will choose high turnover, just to grab time to save capital costs, so as to exchange for market size and profits, but in exchange for batches of rotten houses.

In the early days, the trust got the sweetness from the real estate, and everyone made a lot of money, and the investors were happy after getting about 7-9% of the income, and continued to increase investment.

The trust takes the money and continues to add real estate, and the real estate is fed back to investors, forming a closed loop, and sometimes the sales and banks at the bottom even dare to promise "rigid payment".

Therefore, when the real estate is hot, the speculator is only the end of the link, and the financial funds behind it are the real real estate speculation group.

In this way, the real estate snowball, fed by money and leverage, rolled bigger and bigger until 2019.

The I Ching has clouds, the full moon is missing, the cup is full, and the reincarnation of all things.

In 2019, that is, after the start of the epidemic, the economy was not running smoothly and policy pressure was superimposed, real estate was overwhelmed and fell into a downward cycle, and fireworks were really staged.

First, a series of large-scale developer thunderstorms, Evergrande's 2 trillion incident became famous all over the country, and Brother Belt was spurned by the world.

Not only owes money to the bank, Evergrande is also an important player in the trust, over the years, there are countless cooperative trust companies, and they have also set up 16 trust products, and the expected rate of return promised at the beginning is more than 8%, up to 10.5%.

At that time, Evergrande was one of the strongest developers in the country, and there were countless institutions behind it, and there were licenses given by the China Banking and Insurance Regulatory Commission, so many people not only bought Evergrande houses for investment, but also precipitated all their belongings to Evergrande Trust......

Theoretically, the trust can use its mortgage assets to supplement the payment, but one project is unfinished, two projects are postponed, and three projects cannot be sold...... Plus a stampede escape cash......

The trust institution of the heavy real estate directly collapsed the pallet, became insolvent, and began to follow the thunderstorm, so there is today's Ping An Trust incident.

Of course, there are also good luck, although the developer is thunderous, but the development of the real estate has ended, it can be sold normally, and the money sold can be returned to the trust investor as the principal.

But in fact, after the trust got the assets, it found that something was wrong.

At the beginning, in order to get more financing, developers almost secretly made high valuations, and when they were actually used as collateral, the valuations shrank very seriously.

For this reason, many trust companies can only fight with developers and fall into a long-term dilemma.

At the moment of the thunderstorm, investors ran to ask the bank, but the most trusted institution gave a reply:

Banks are only product distribution channels, and do not bear relevant risks in accordance with relevant regulations, but only assist investors and trust companies in communication.

Ask the account manager again, and many have already left......

03

Soros, a capital tycoon, once said that the essence of finance is fraud.

In this feast of plundering the rich, banks, trusts, developers, and even the licensed and local governments behind the scenes are all participants.

But did you say they won?

They didn't win, the banks were in bad debt, the trusts and developers were thundering, the credibility of the institutions was damaged, and the local government was heavily in debt.

But do you say that the rich people of investment trusts are pitiful?

The same cannot be said either.

In 2018, Chairman Guo of the China Banking and Insurance Regulatory Commission warned that under the current economic conditions, any product that promises a return of more than 6% will have to be questioned, more than 8% will be dangerous, and more than 10% will be prepared to lose all the principal.

However, few investors are willing to believe this, and what is even more interesting is that the market has not stopped institutions from opening their doors with the promise of 7-9% or even higher returns.

This is actually finance.

Everyone knows that there is a risk, and they also know that there will be a day when the boat capsizes, but everyone seems to have no choice but to rush forward.

If the developer does not continue to borrow money, it will not be able to repay the old debt, the trust will not be able to repay the previous promise if it does not issue new products, and if the bank does not sell the product, the people in the bank will have nothing to eat.

Everyone was wrapped up in a big boat, blindfolded, and no one wanted to get off the boat, and finally the tsunami of humanity was destroyed.

This round of real estate cycle has stripped off the bottoms of the financial industry, and many people think that the glamorous office buildings are doing some high-end business, but when they take a closer look, they are actually doing the simplest arbitrage business.

So where have the trillions of money evaporated in the financial market in the past two years gone?

Now everyone should have the answer, part of it has been transformed into reinforced concrete and settled on the ground, part of it has returned to the land finance to continue to support the operation of the city, and some of it has long been transferred overseas by some snakes and rats.

Of course, more often than not, with the decline of real estate, trillions of valuations have been wiped out and come to naught.

The downward trend of real estate has punctured all illusions of wealth.

People originally thought that "a whale falls, all things are born", but in fact, it is "a whale falls, everything collapses", in addition to asset management, the rich are harvested, all walks of life are affected, from last year to this year's body sadness, mostly stems from this.

However, all this is a good thing, after the end of deleveraging, a new leverage cycle is brewing, and this round is an industrial-driven economic recovery cycle, although it is not so rich and expensive, but it is safe and practical.

The developers who build houses are still there, but they are more focused on making good products, the people who buy houses are still there, but they are more focused on cost performance, and the people who are engaged in finance are still there, but they are not as profitable as they were at the beginning.

Everything is still there, but a different group of people.

View original image 958K

•