2015-02-05

Handan Still Sorting Through the Debris of Credit Collapse; Still Afraid To Buy New Homes

Handan's private credit bubble has a much farther reach than the collapses in Wenzhou and Ordos, which were confined to the cities. Small rural savers were destroyed by the loss of their life savings, such as one happy father who died in anger after watching his savings disappear.
Compared to private lending crisis was in Wenzhou, Ordos happened, Handan financing crisis spread to the vast countryside - a wider group of victims, the number of additional financing chain.

Last November 26, is to the south of an old man's security, "the first seven." Today, his son is still unwilling to believe that a soldier's father originally optimistic, because of a $ 50,000 "deposit" died of anger.
Rural cooperatives showed the depositors the low 3% products, and then offered 10% products to entice the savers. Even if the farmers didn't bite the first time, they kept "fertilizing their crop" in order to induce the farmers to invest their savings in high interest products.

The private credit market has collapsed and that's leading to further defaults.
Not long ago, the company has a small business customer default, in order to recover less than ¥10,000 in debt, they took a dozen colleagues to collect the debt. "This customer has a lot of other debt, we are the smallest creditor, this battle scared him, the next day he repaid the debt." Xiaojiang plainly said there's no other way.

According to Xiaojiang, customers do not need any collateral, just to provide their cash flow in recent months, the company will be able to get a loan that does not exceed 300,000, with interest of 17% to 24% per annum. With the private financing crisis spreading, their clients default rate increased significantly, the firm has been quietly tightening the lending limit.
Once the credit system collapsed, the main industries in Handan also collapsed, and then no one had money to lend.
Looking around the private lending crisis, many samples vulnerabilities of private lending, and in maintaining its relatively small area in the "acquaintance model" of private credit system. When the market is up, the interest of a prosperity chain, once the market down, weak private credit system is very easy to break.

Why the recent fund-raising people frequently run away? Zhengbao Reporter survey found that the area of ​​private lending capital chain rupture, are more or less associated with the local pillar industries of depression. When the emergence of a regional pillar industries collapse, maintain the original lending relationship between acquaintances into a "source of water."

Wind at the end of the Qingping. Relying on coal and the rise of the Ordos similar, sitting on a huge amount of resources, Handan Iron and Steel once said that "the country Xue Hangang" and famous. However, with the disappearance of "4 trillion" stimulus effect exhausted, serious overcapacity and pollution pressure, so once glorious moment of the steel city, then face the Nirvana rebirth choice.

A few years ago, the traditional pillar industries of steel, cement and other to end for the occasion, Handan began by "three years" in the east to develop the real estate industry. However, compared to the limited urban population, the expansion of the property market in recent years, big supply, and finally on the verge of collapse last summer.
Residents are still afraid to buy new homes because of all the down payments that were lost when the developers went bust. In January of this year, existing home prices have stabilized, but new home prices continue to collapse and no one even comes to inquire about them.
"I'm really afraid, last year gave money to a developer friend, and now I no longer dare to believe in someone else's promises, even if it's a very close classmate and friend." A local lender in Handan told reporters that some of the locals to buy existing homes prefer a rather high price, and do not make advance investments.
Hard numbers are tough to come buy, but the private lending market may have been as large as ¥50 to ¥60 billion.

21CBH: 邯郸融资危机百日追踪 民间借贷的乡间风暴

Some background: Handan.

April: Handan Farm Cooperative Goes Bust; 100,000 Rural Households Invested Over ¥140 million; Boss Has Fled
September: Handan Credit Bubble Affects Entire City Economy
Credit Bubble Collapses in Handan; Arrests Made; Developers Repaying Suppliers With Property
Handan Residents Afraid to Buy Homes; Market Frozen With Developers on the Brink

No comments:

Post a Comment