Ouch, there is a big news in the United States, the First Republic Bank, which is known as the "giant" of the American financial industry, has actually gone bankrupt, which can shock the global financial market. Not to mention the Chinese tycoons who deposit money in this bank, their "iron bucket money" is not guaranteed!
With $213 billion in assets, First Republic Bank is one of the largest banks in the United States. But who would have thought that it would go bankrupt in such a "poof"? Fortunately, nearly 100 billion dollars of assets have been affected, including the banknotes of many Chinese tycoons.
I wondered, why are these Chinese tycoons so "blinded"? Aren't they asking for trouble by depositing so much money in a foreign bank? Are they afraid that they don't understand anything about the risks of these overseas investments? What is the reason for them to be so careless?
It's a long story. But as the old saying goes, "if it's too long, it's too short." Let me tell you about it from the beginning.
We, the Chinese tycoons, have always kept their banknotes in domestic banks, after all, domestic banks are strong and their deposits are still guaranteed. But in recent years, they have begun to set their sights on overseas markets and have transferred a lot of money abroad.
The reason why they do this is, firstly, to diversify investment risks, and secondly, to fancy the return on investment in overseas markets. But are they too optimistic? They underestimate the risks of overseas investment.
Let's take the bankruptcy of First Republic Bank as an example. The bank's failure was mainly influenced by multiple factors such as interest rate hikes in the United States, business deficiencies, and risk contagion. According to the Federal Deposit Insurance Corporation (FDIC), the bankruptcy will affect nearly $100 billion in assets. These include a large number of Chinese billionaires' investments in deposits, bonds and stocks at the bank.
Come to think of it, if you're a rich Chinese and you keep a lot of money in this bank, it's all gone. In particular, those deposits, according to the deposit insurance system in the United States, only deposits up to $250,000 are covered, and the excess is lost. What's even more frightening is that even the so-called "capital preservation" investment instruments such as bonds and stocks will face the risk of shrinking significantly or even becoming unredeemable in the event of bank bankruptcy. Isn't this a waste of the "iron bucket money" of China's rich people?
I think the Chinese billionaires are underestimating the risk when they invest in overseas assets. They may just see the high returns in overseas markets, but ignore the risks behind them.
This incident has undoubtedly taught a profound lesson to China's tycoons. From then on, they have to think twice about allocating overseas assets. My advice is that they need to learn to spread their investment risk wisely and put their eggs in different baskets. Don't keep all your banknotes in one bank, as you did this time.
They can diversify their assets to different financial institutions, different countries and regions. In this way, even if there is a problem in one market or institution, it will not lead to the loss of all assets. In addition, they should also consider the risk factor when choosing an investment vehicle. I see, just keeping money in the bank is too risky. They can consider some other investment methods, such as buying government bonds or investing in real estate, etc., which will be relatively less risky. Of course, any investment is risky. Therefore, Chinese tycoons also need to strengthen the assessment of investment risks and have a clear understanding of the risk exposure of each investment vehicle. Only in this way can they truly manage their risks and avoid repeating the mistakes of the past.
The collapse of First Republic Bank is not only a profound lesson for China's wealthy people, but also a wake-up call for the government and regulators. For governments and regulators, they must step up supervision of foreign financial institutions to ensure that they operate in compliance and have manageable risks. At the same time, they must also establish a sound mechanism for protecting the rights and interests of overseas investors, so that the majority of investors can enjoy the protection of their rights and interests when investing overseas.
I don't think the government and regulators are doing enough in this regard. On the other hand, governments and regulators need to step up efforts to educate investors and improve their financial literacy and risk awareness. I'll take us ordinary people as an example, most people still don't know much about investment and financial management. Not to mention the high-risk overseas investments, which don't even have a basic risk assessment. So, governments and regulators must take action to educate the public about investors. Let everyone understand the basic knowledge of investment and master the methods of risk assessment, so that they can be targeted and avoid blindly following the trend.
This thing is a long story. However, I have a little episode I would like to tell you about. A while ago, I went to the bank to do some errands, and I accidentally saw an old lady holding a large stack of banknotes in her hand, and she was about to deposit them in the bank. I asked her curiously, "With so much money, aren't you afraid that it will not be insured in the bank?" The old lady was clever and said that she had scattered the money in several banks to prevent this kind of risk. I am admirable when I hear it, we ordinary people are sometimes more experienced and wise than those so-called "rich"!
The bankruptcy of First Republic Bank is undoubtedly a wake-up call for the safety of overseas assets of China's wealthy people. It reminds us to exercise caution and not to be careless when investing in overseas assets.
China's billionaires must re-examine their overseas asset allocation and rationally diversify their investment risks. It is necessary to strengthen the risk assessment of investment vehicles and choose the investment method that suits them; We must improve our financial literacy and enhance our risk awareness.
At the same time, the government and regulators must also take a clear stand to strengthen supervision, improve the protection mechanism for the rights and interests of overseas investors, and increase investor education for the public, so as to create a safer and more orderly investment environment for overseas investors.
As the saying goes, "Money is like dung, and only when it is used in the right place can a towering tree grow." "May our country's wealthy people learn from this lesson, and use their wisdom to safely "plant" their money in the right soil, and finally bear abundant fruits!
This thing is a long story. But as the old saying goes, "failure is the mother of success". As long as everyone learns a lesson from this and heightens their vigilance, I believe that our country's rich people will be able to win the battle and let those "iron buckets of money" land safely and win the final victory!
(Reference data sources for this article: Federal Deposit Insurance Corporation Bulletin, news media reports)