Tuesday, March 11, 2014

China commodity de-levering inducing turmoil for copper (copper futures finish under $ 3.00 , LME carnage for copper as well on March 11 , 2014 ) Damage extends to iron ore and related credit market shudders for corporate bonds and structured products in China - more bonds coming due this year with more potential defaults !

China collateral issues looming......


Here's Why The Market Is Shrugging At TBE's "Promise" Not To Default In July

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The "good" news this evening is that Baoding Tianwei Baobian Electric Co (TBE), the company which as recently as two days ago was rumored to be the second "imminent" Chinese corporate bond default which sent copper to multi year lows, has issued a statement that it will not default on its upcoming interest payment (due July 11th - so how the delisted company is convinced it will have enough cash four months from now is a mystery). The "bad" news is that markets don't care. There is a slight whiff of positivity in Copper futures but aside from that, weakness continues in China's corporate bond and stock market. Simply put, the market gets it - this is no longer about the next idiosyncratic bond (or trust) to default; this is about Xi's renewed confidence in efforts to 'clean up' the mounting local government and corporate debts and shrink the shadow-banking bubble. This is systemic, and the markets know it.
Hooray...
  • *BAODING TIANWEI SAYS CO. TO PAY BOND INTEREST ON TIME
Copper was excited momentarily...
Co. will pay bond interest for due July 2014 on time, according to a statement to the Shanghai stock exchange.
So to be clear, TBE is promising that in 4 months it will pay interest on a bond that it currently has zero liquidty to pay, is losing money, and is in an industry that the government has specifically targeted for 'normalization'...
BofA explains why is it not a big piece of news in China?
To the Mainland China media, the delisting of TBE bonds is not a big piece of news, in our view, because TBE was already in a law suit on its other debt, and the “new energy” sector has been in deep trouble anyway(as we have seen with Wuxi Suntech and Chaori). TBE is in the business of making power transmission equipment, but in recent years has heavily invested in the ill-fated new energy sector which has resulted in two straight years of losses with the losses in 2013 surging to RMB5.2bn. TBE’s Shanghai Stock Exchange listed bond was issued in 2011, with principal at RMB1.6bn, a 5.75% yield and 7-year tenor. TBE’s stock price has already fallen by 15% this year. TBE’s controlling shareholder is Tianwei Group, which is a central-government owned company.

We do see a significant rise in bond and trust loan defaults We believe the chance of corporate bond and trust loan defaults will rise significantly in 2014 as a more confident President Xi Jinping and Premier Li Keqiang will aim to seriously clean up mounting local government and corporate debts.
As Li himself noted,
Though Mr Li said that he could not possibly "want to see" defaults in financial products, he added that "sometimes certain individual cases of such defaults are hardly avoidable".
As a gentle reminder (from our very detailed coverage of the China bubble about to burst), the bubble is gigantic (as Marc Faber would say) and there are many more debt maturities coming up...
 


Everyone should also know that like a metastatic cancer, the amount of non-performing, bad loans within the Chinese financial system is growing at an exponential pace.

Finally, what everyone learned over the past month, is that as the two massive, and unresolvable forces, come to a head, the first cracks in the facade are starting to appear as first one then another shadow-banking Trust product failed and had to be bailed out in the last minute.
However, as we showed again last week, the default party in China is only just beginning as Trust failures in the coming months are set to accelerate at a breakneck pace.
So as Moody's noted:
Analysts see more such defaults in the coming months in sectors with overcapacity, such as steel and mining, as crackdowns on careless loans continue. "The lack of intervention is consistent with the central Chinese government's adoption of more market-oriented policies, which include increased tolerance for corporate bond defaults, as it reforms the country's financial markets," Moody's said in a commentary after the default.
In conclusion, one default here or there now is no longer relevant as the first crack in the dam has been made. Risk will be re-priced... confidence has been broken that money is free and 10% yields are riskless... finally, as we previously noted in great detail, here are the next steps...
The question, however, in addition to "why", is whether the Fed also agrees with BofA's stunningly frank, and quite disturbing conclusion, perhaps finally realizing that aside from the US, the biggest house of cards that would topple once the "flow"-free emperor is exposed in his nudity, is that of the world's largest "growth" (and credit) dynamo of the past two decades - China. Because, as noted above, if Lehman's collapse was bad, a deflationary collapse brought on by Chinese hard landing coupled with a full unwind of the global carry trade, would be disastrous and send the world into a depression the likes of which have never before been seen.
Finally, for those who want the blow by blow, here is BofA's tentative take of what the preliminary steps of the next global great depression will look like:
If we do experience a sizable default, the knee-jerk market reaction will be cash hoarding since it will strike as a big surprise. Thus, we expect the repo rate to rise first, while the long term government bond would get bid due to risk aversion flows.

However, what follows will be quite uncertain, aside from PBoC injecting liquidity and easing monetary policy to help short term rate come down. It has been proven again and again the Chinese government will get involved and be proactive. The bond market reaction will be different depending on the government solution.
Alas, at that point, not even the world's largest bazooka will be enough.
At this point one should conclude that reality - through massive, unprecedented liquidity injections - has been deferred long enough. It is time to let the markets finally return to some semblance of uncentrally-planned normalcy: there is a reason why nature abhors a vacuum. Even if it means the eruption of the very painful grand reset, washing away decades of capital misallocation, lies and ill-gotten wealth, so very overdue.






and....











Is This The Cheapest (And Most Levered) Way To Play The Chinese Credit-Commodity Crunch?

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"The best way to define the mood in the market right now is panic," warns one commodity broker, adding that "everyone understands why we are going down, but nobody can tell where the bottom is." As the WSJ notes, the economic slowdown in China is hammering prices of some raw materials, driving down industrial commodities from copper to iron ore and coal - exacerbated by the vicious cycle of credit-collateral-contraction. So what is the cheapest way to play continued stress (with potentially limited downside)? Thediversified natural resources company Glencore has a huge $55 billion of debt, is drastically sensitive to copper (and other commodity) prices, and its CDS remains just off record tights...
Is Glencore the most exposed to a decline in commodities prices? – A trading giant rated BBB with over $55bn of debt and heavy exposure to commodities. 
A downgrade to below investment grade would be catastrophic to Glencore’s trading business. 
Company’s 12/31/2013 presentation says a 10% decline in Copper Prices would reduce EBIT By $1.2bn...

As of 12/31/13, Glencore had $55.185 billion in Gross Debt
By 3/12/2014, Copper has declined to a 44 month low, 12% decline in YTD 2014
Glencore reports Net Debt of $35.882bn, which is $55.2bn of gross debt minus $2bn of cash minus $16.4bn of "Readily Marketable Inventories." Nowhere do they define what’s included in the Readily Marketable Inventories and whether or not the RMIs are hedged.  The firm is still highly levered for investment grade even if RMIs can be converted into cash at stated value.
As if that was not enough, the CFTC and DOJ are currently investigating commodities price manipulation and Glencore has been named in several aluminum antitrust suits; leaving the question of liability hanging over their head.
Via WSJ,
“The economic slowdown in China is hammering prices of some raw materials, driving down industrial commodities from copper to iron ore and coal

...

copper prices skidded to their lowest level since June 2010, bringing the metal's year-to-date losses to 12%. Iron-ore prices are down 8.1% this week, after falling to their lowest level since October 2012 on Monday. Aluminum, lead and zinc prices also have declined in recent days

...

"The best way to define the mood in the market right now is panic,"

...

Now that growth in the world's second-largest economy is downshifting from double digits to an estimated 7.5% this year, many investors and analysts predict global demand growth for industrial commodities will slacken...Iron ore is the main component of steel. China's steel consumption has surged in the past decade as the property and manufacturing sectors boomed. Now that China's leadership has pledged for a more consumer-focused economy, the demand trajectory for steel is in doubt, analysts said…Coking coal, used to fuel the blast furnaces that forge steel, has also been under pressure, with prices down 7.1% this year…

Last week's first-ever corporate-bond default on the mainland showed that the Chinese government isn't guaranteeing this corner of the country's credit market, as was widely believed. The yuan's weakening has made it more expensive for companies to import dollar-denominated commodities to be used as collateral for loans created outside formal channels for bank lending

...

"If there's a string of defaults in China, there's no question that demand for copper and iron ore and other commodities where China's been a major driver would be threatened in a material way,"

...

And some analysts and investors say the magnitude of the recent price declines in copper and iron ore aren't justified because Chinese authorities are unlikely to allow the country's credit markets to completely unravel…"You've got the credit issue in China...and you've got also reasonably high iron-ore [stockpiles]," said Jimmy Wilson, for iron ore at BHP Billiton, on the sidelines of a conference in Perth, Australia. "Traders have a view that the price is going to go down so they do everything they can to hold back" on buying.”
At 170bps and with 155bps as a floor for the last 6 months, it seems like a cheap protection play on further Chinese/Commodity contraction

h/t Manal

















http://www.zerohedge.com/news/2014-03-12/baltic-dry-plunges-8-near-most-6-years

( Iron ore having a tough day .... )


Baltic Dry Plunges 8%, Near Most In 6 Years As Iron Ore At Chinese Ports Hits All Time High

Tyler Durden's picture






It would appear record inventories of Iron ore and plunging prices due to China's shadow-banking unwind have started to weigh on the all-too-important-when-it-is-going-up-but-let's-blame-supply-when-dropping Baltic Dry Index. With the worst start to a year in over a decade, the recent recovery in prices provided faint hope that the worst of the global trade collapse was over... however, today's 8% plunge - on par with the biggest drops in the last 6 years - suggests things are far from self-sustaining. Still think we are insulated from the arcane China shadow-banking system, which suddenly everyone is an expert of suddenly? Think again.


Why? Perhaps the following chart showing Chinese iron ore steel stockpiles at the country's 34 major ports will provide the answer:
Charts: Bloomberg








http://www.zerohedge.com/news/2014-03-11/copper-limit-down-shanghai-falls-lowest-july-2009



Copper Limit Down In Shanghai; Falls To Lowest Since July 2009

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Following a triumvirate of macro misses from AsiaPac (South Korea unemployment surged, Aussie confidence plunged, and Japanese inflation tumbled), the credit concerns running riot through the collateral underlying China's shadow banking system continue to crush Copper (and iron ore) prices. Copper is limit down in Shanghai at its lowest since July 2009 - these size moves have only occurred twice in history (Lehman and the US downgrade). Japanese stocks are ignoring any ramp efforts in USDJPY and US equity futures are fading qucikly with AUDJPY....

A sprinkling of headlines from this evening:
  • South Korea unemployment jumped to 3.9% (exp 3.2%, prev 3.2%) - highest in 3 years
  • Aussie Consumer Confidence dropped to 10-month lows
  • Japanese Producer Price Inflation (Domestic Corporate Goods) MoM -0.2% - biggest deflation since Dec 2012 and YoY slowest since June 2013
  • *JAPAN'S NIKKEI 225 DROPS BELOW 15,000
  • *JAPAN'S NIKKEI 225 EXTENDS LOSSES TO 2%
  • *COPPER IN SHANGHAI DROPS AS MUCH AS 5.2% TO 43,800 YUAN/MT (close to biggest drop since Dec 08)

Leaves copper echoinG Lehman and the US downgrade...

With the Nikkei unable to catch a bid from JPY ramp

and S&P futures continuing to track AUDJPY lower..
















http://www.zerohedge.com/news/2014-03-11/magic-collateral-frank-look-sheer-credit-horror-about-be-unleashed-china



"Magic" Collateral: A Frank Look At The Sheer Credit Horror About To Be Unleashed In China

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While the world is terrified about what China - where corporate bond defaults are now permitted - may be about to unleash on the world, most are all too happy to remain in a state of delightful ignorance. We decided to take a peek behind the scenes.
Recall that as we have repeatedly shown in the calendar of coming Chinese bond default, on March 31, a borrower named "Magic" (no comment) is set to default on a CNY196 million Trust.
The default may or may not happen, as there is always a high likelihood it will simply be bailed out as has happened frequently in the past, but regardless of the final outcome, here is what is really going on behind the scenes. From Bank of America:
31 Mar 2014, Rmb196mn borrowed by Magic Property & arranged by CITIC Trust

Details: invested in an office building in Chongqing. The Chongqing developer ran into financial problems in mid-2013. CITIC Trust tried to auction the collateral but failed to do so because the developer has sold the collateral and also mortgaged it to a few other lenders.

Potential outcome: The developer and the trust company may share the repayment.

Reasons: 1) When CITIC Trust sold the product, it did not specify the underlying investment project. 2) The local government has intervened, fearing social unrestA local buyer of a unit in the office building committed suicide as he/she could not obtain the title to the property due to the title dispute between the trust and the developer.
Please re-read that first part again:
CITIC Trust tried to auction the collateral but failed to do so because the developer has sold the collateral and also mortgaged it to a few other lenders.
So, "Magic" not only sold the collateral... but also mortgaged it to a few other lenders: lenders who count its as a perfectly performing asset when in reality they have zero claims to it. Did they steal that straight from the MF Global instruction manual?
Now add this:
"The local government has intervened, fearing social unrest. A local buyer of a unit in the office building committed suicide as he/she could not obtain the title to the property due to the title dispute between the trust and the developer."
... and multiply by a few thousand for all the other shadow (and not so shadow) players who have engaged in precisely this kind of gross abuse of underlying collateral, which also happens to be the main reason why China can magically create trillions in debt out of thin air with zero collateral constraints, each and every year, no questions asked.
Well, the time to ask a question or two has finally arrived.



http://www.zerohedge.com/news/2014-03-11/stocks-retrace-putin-gains-copper-and-yen-carry-crash

Stocks Retrace Putin Gains As Copper And Yen-Carry Crash

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Just before the European close, copper prices on the LME (and US futures) began to crack on rumors that another China corporate had defaulted. This plunge was accompanied by a collapsed in AUD and rumors across desks were a levered fund unwind (which appears some China-commodity play) was responsible. While many would like to believe that fundamentals matter, today made it clear they don't as AUDJPY weakness dragged stocks lower tick-for-tick. A brief moment of hope in the early-afternoon - where VIX was slammed lower as momentum away from carry was sparked  failed and stocks continued to slide, retracing a considerable amount of post-Putin gains.Bonds and gold were bid (after the latter suffered early) as WTI crude slipped back under $100 and copper was crushed.

AUDJPY led the S&P lower... (note the brief hope in blue) where stocks disconnected higher...

Which was driven by a slamdown effort in VIX (blue)

With AUD's collapse starting as Europe closed along with Copper's dive...

All major indices fell today - retracing much of the post-Putin gains...

Bonds remain discnncted from stocks thanks to the squeeze on Friday with payrolls - we suspect the bearish bias is being sustained thanks to the massive size of corporate issuance recently and need for rate-lock hedging by dealers...

Gold outperformed and caught back up to Putin levels but overall commodities suffered on the day...

FX markets have been domianted by AUD strength and JPY weakness since Putin but that is unwinding rapidly - note that theUSD Index is now unchanged since Putin's speech!

"Most Shorted" stocks are getting hammered relative to the market (which is thi new normal is worrisome as it provides more ammo for the next ramping leg.. until it doesn't)...

Credit markets remain very skeptical...

Charts: Bloomberg
Bonus Chart: The hedge-fund hotel GSEs took it on the chin. Presenting - the Ackcat




http://www.zerohedge.com/news/2014-03-11/chinese-credit-concerns-clobber-copper-collapse-continues-lowest-july-2010



Chinese Credit Concerns Clobber Copper; Collapse Continues To Lowest Since July 2010


Tyler Durden's picture





Copper futures prices are plunging once again, back under $3.00 back at the lowest levels since July 2010. The last 3 days have seen prices drop over 7.5% as China credit contagion concerns surge and letters-of-credit from last summer's cash-for-copper financing deals roll-off and businesses need the cash. The vicious circle of tumbling collateral values(copper and Iron ore) is exacerbating the tightening financial conditions in China as banks hoard liquidity, unwilling to lend to the over-capacity industries that the government has deemed unworthy.Rumors today of further defaults triggered this latest drop, and as we noted previously, there are a lot more to come.
Copper futures intraday are collapsing...

Which takes it back to July 2010 levels...


Rumors today of another Chinese corporate default, the second in a row are adding fuelt to the fire.  Via BusinessWeek,
Baoding Tianwei Baobian Electric Co. (600550)’s bonds and stock were suspended from trading today after the Chinese electrical equipment maker said it reported losses for a second year running.

The company, which also makes solar panels and is based in the northeast province of Hebei, reported a net loss of 5.23 billion yuan ($852 million) in 2013 versus a 1.55 billion yuan earnings deficit a year ago, according to a statement to the Shanghai stock exchange yesterday. The exchange, in line with its rules, will decide in seven trading days whether to continue the trading halt on Tianwei Baobian Electric’s bonds until its losses are reversed.

Investor scrutiny of China’s onshore bond market is mounting after Shanghai Chaori Solar Energy Science & Technology Co. last week became the first company to default. Chaori Solar’s failure to pay has stoked speculation more companies may miss debt deadlines also.
Naturally, for an economy in which credit creation is of utmost importance, the loss of one such key financing channel will have very unintended consequences at best, and could potentially lead to a significant "credit event" in the world's fastest growing large economy at worst.
And don't look at what's coming down the shadow banking default pipelines, as we showed before. via BofA's David Cui
12 potential defaults reported by the media
Table 1 summarizes the information on the 12 major potential defaults in the trust industry that have been reported by the media. Most of them are coal mine related and heavily concentrated in one area, Shanxi Province. So far it seems to us that most of them may get extended upon the due date. The only exception over the next few months appears to be a product issued by China Credit Trust for a lead and zinc miner in Sichuan, Nonggeshan. Even without any major default over the next few months, the process of debt restructuring can be messy and weigh heavily on market sentiment.
19 Feb 2014, Rmb109mn borrowed by Liansheng & arranged by Jilin Trust
  • Details: This Rmb109mn tranche is part of a six-tranche trust product worth a total of Rmb973mn arranged by Jilin Trust for Liansheng, a Shanxi coal miner. The other five tranches have matured since 2H 2013 and remain overdue.
  • Potential outcome: Repayment may be extended.
  • Reason: Liansheng is undergoing a debt restructuring coordinated by the Shanxi provincial government. 1) The provincial government plans to help out involved financial institutions to ensure the region’s access to ongoing financing. According to people close to the situation, the implicit guarantee practice will most likely continue with the Liansheng’s case. 2) Trust companies may have to follow banks to help the miner out. Banks have agreed to extend their mid/long term loans by three years. Top 3 banks have total debts of Rmb10.6bn to Liansheng; top 3 trust lenders, Rmb3.7bn.
(Shanghai Securities News, 2/11; Economic Information, 2/13)
21 Feb 2014, Rmb500mn borrowed by Liansheng & arranged by Shanxi Trust
  • Potential outcome: repayment may be extended.
  • Reason: Same as the Jilin Trust case.
(Caiing 1/27; China Securities Journal, 1/27; 21st Century Business Herald, 2/14)
07 Mar 2014, Rmb664mn borrowed by Liansheng & arranged by Changan Trust
  • Details: Other than the Rmb664mn product to mature on Mar 7, Changan Trust arranged another two products for Liansheng, totaling Rmb536mn which matured in Nov 2013. Both products remain overdue.
  • Potential outcome: repayment may be extended.
  • Reason: Same as the other Liansheng cases.
(Caiing 1/27; China Securities Journal, 1/27; 21st Century Business Herald, 2/14)
31 Mar 2014, Rmb196mn borrowed by Magic Property & arranged by CITIC Trust
  • Details: invested in an office building in Chongqing. The Chongqing developer ran into financial problems in mid-2013. CITIC Trust tried to auction the collateral but failed to do so because the developer has sold the collateral and also mortgaged it to a few other lenders.
  • Potential outcome: The developer and the trust company may share the repayment.
  • Reasons: 1) When CITIC Trust sold the product, it did not specify the underlying investment project. 2) The local government has intervened, fearing social unrest. A local buyer of a unit in the office building committed suicide as he/she could not obtain the title to the property due to the title dispute between the trust and the developer.
(Source: Financial Planning Weekly, 3/6/2013; Guangzhou Daily, 4/6/2013, Boxun, 5/10/2013)
14 May 2014, Rmb1.5bn borrowed by Liansheng & arranged by China Jiangxi International Trust
  • Potential outcome: repayment may be extended.
  • Reason: Same as the other three Liansheng cases.
(Caiing 1/27; China Securities Journal, 1/27; 21st Century Business Herald, 2/14)
30 May 2014, Rmb140mn borrowed by Nonggeshan & arranged by China Credit Trust
  • Details: invested in a lead and zinc mine in Sichuan.
  • Potential outcome: Likely to default.
  • Reasons: 1) Compared to coal mines of Zhenfu and Liansheng, the lead and zinc mine is a much less attractive asset: it is located in the mountains over 5,000 meters in altitude, inaccessible for 6 months of the year due to weather conditions, with low lead/zinc content; 2) According to an unnamed regulator, the central government is comfortable with trust defaults in the range of Rmb100-200mn.
(Source: 21st Century Business Herald, 31/7/2012; Caiing, 1/27)
25 Jul 2014, Rmb1.3bn borrowed by Xinbeifang & arranged by China Credit Trust
  • Details: Xinbeifang is another Shanxi coal miner.
  • Potential outcome: repayment may be extended.
  • Reason: Xinbeifang is negotiating with an SOE to sell some of its coal mine assets.
(Source: China Securities Journal, 1/15)
27 Jul 2014, Rmb319mn borrowed by Hongsheng & arranged by Huarong Trust
  • Details: Hongsheng is a Shanxi coal miner. Huarong sold another trust product for it which will mature in 4 September 2014, worth Rmb63mn.
  • Potential outcome: repayment may be extended.
  • Reason: Hongsheng may have assets to secure more financing. It issued these two trust products to replace another trust product that matured in Q3 2012. The owner also issued other trust products using his personal property assets as collateral and raised Rmb1.2bn.
(21st Century Business Herald, 20/12/2013)
7 Sept 2014: Rmb400mn borrowed by Zengdai & arranged by CCB Trust
  • Details: 1) The proceeds of the product were invested in financial markets. 2) Its 1st tranche, worth Rmb400mn, matured in Mar 2013 with a 38% loss vs. an expected return of 20-30%. Investors agreed to extend the maturity of the product to Sept 2014. 3) Its 2nd tranche, worth Rmb359mn, matured in June 2013 with a 31% loss vs. an expected return of 20-30%. Investors agreed to extend the maturity of the 2nd tranche to Dec 2014.
  • Potential outcome: The trust company and the investment company may share the losses.
  • Reasons: 1) The investment company refused to repay investors in full at the original due date so the trust company may have to chip in; 2) By Jan 2014, the 1st tranche reported a narrower loss of 24%, and the 2nd tranche, also a narrower loss of 13%; 3) Zengdai may pay on behalf of its investment company for reputation’s sake.
(Source: Securities Daily, 9/7/2013; CCB Trust)
20 Nov 2014, Rmb600mn borrowed by Liansheng & arranged by China Jiangxi Int'l Trust
  • Potential outcome: repayment may be extended.
  • Reason: Same as the other Liansheng cases.
(Caiing 1/27; China Securities Journal, 1/27; 21st Century Business Herald, 2/14)
23 Dec2014: Rmb1.1bn borrowed by Xiaoyi Dewei & arranged by China Resources Trust
  • Details: Xiaoyi Dewei is a Shanxi coal miner. The trust product originally matured in Dec 2013 but repayment was extended to Dec 2014.
  • Potential outcome: Likely to default.
  • Reason: Both the miner and the trust company refused to repay investors in full at the original due date. There has been no reporting on asset sales by Xiaoyi Dewei.
(Source: Financial Planning Weekly, 11 Nov 2013)
15 Jan 2015, Rmb1.2bn borrowed by Hongsheng’s owner & arranged by Minmetals Trust
  • Details: the collateral is the Shanxi coal miner’s personal property assets.
  • Potential outcome: May be replaced by a new trust product.
  • Reason: Same as the July 2014 Rmb319mn trust product issued by Huarong Trust.
(21st Century Business Herald, 20/12/2013)
2Q/3Q 2014 – the next peak maturing period for collective trusts
We consider the trust market the most vulnerable part of the major financing channels for companies, i.e. loan, corporate bond and trust. The quality of the borrowers in the trust market tends to among the lowest. Within the trust market, collective trust products, i.e. those sold to more than one investor, tend to be risker than single trust products, i.e. those sold to a single investor. This is because investors in single trust products tend to be more substantial in resources, thus most likely more sophisticated in their risk control.
The Wind database lists close to 12,000 collective trust products, worth Rmb1.34tr, which cover roughly half of the collective trust market (Rmb2.72tr as of the end of 2013). It has reasonably good quality data series on the issuing dates and amounts raised. However, data on maturing dates are sporadic. We estimate that the average duration of the trust products is around 2 years. Based on this assumption and the issuing dates, we have mapped out a rough maturing profile of the collective trust market. As we can see from Chart 1, 2Q and 3Q this year will be the next peak maturing period for this market.