Signs of a Credit Bubble: A-Shares Firms Loading Up on WMPs

iFeng: A股公司理财规模近万亿 五年暴增近300倍

986.3 billion yuan, which is this year, A-share listed companies to buy financial products in the total amount equivalent to half of the balance of Yu E Bao.

China Securities Journal (ID: xhszzb) Choice reporter access to data discovery, this year a total of 974 A-share companies to buy financial products, accounting for more than 29%. Purchases equivalent to 127.5% of last year. 413 companies to disclose financial products yield to maturity in the statistics, 38 companies financial products yield to maturity is higher than the semi-annual reported net profit.

...From 2.75 to 773.3 billion in five years

Choice according to statistics, as of September 10, this year has 974 A-share companies involved in the purchase of financial products, the cumulative size of 986.3 billion yuan; while last year a total of 774 listed companies involved in the purchase of financial products, the cumulative number of financial management to 10076 times, total purchases of about 773.3 billion yuan. In other words, this year more than 29% of A-share companies to buy financial products, and purchases are equivalent to 127.5% of last year.

The chart below shows year, number of firms buying WMPs, number of purchases of WMPs, and total value. The bottom row is the cumulative total over the past 5 years.

These are the top ten firms buying WMPs this year. I've made a paper portfolio of them, 10 percent equal shares.

China Shenhua Energy Company Limited 601088
Xinhu Zhongbao Co Ltd 600208
Guangdong Wens Foodstuff Group Co Ltd 300498
China Shipbuilding Indusr Grp Pwr Co Ltd 600482
Minmetals Capital Co Ltd 600390
JiangSu Bicon Pharmaceutical Listed Co 002411
Changsheng Bio-technology Co Ltd 002680
Sany Heavy Industry Co., LTD 600031
Oriental Pearl Media Co Ltd 600637
GUANGZHOU ZHUJIANG BREWERY CO.,LTD 002461

Seven companies are profitable thanks to WMP earnings, while 31 others earned more from WMPs than from their operations:

Choice statistics show that 413 companies to disclose the yield to maturity of statistics in the first half of 2017, a total of 38 financial products yield to maturity is higher than the company's net profit, which ST Minco, Yin Fung Holdings, * ST good power , etc. 7 companies rely on income investment products obtained resulting in net profit is positive. For example, ST Minco show net profit of 14.8103 million yuan in the first half, while its financial income of up to 31.1575 million yuan, equivalent to 2 times more than the net profit.

...An investment banker, told reporters, bank financing yields continued to rise this year to some extent stimulate the investment enthusiasm of listed companies, in many cases, banks are disguising WMPs sales as loans.

"Banks currently weak growth in deposits, banks Lanchu fierce competition, at the introduction of high-yield financial products to attract customers, the cost of liability-side end uplift lead to asset yields continued upward. This will lead to the end of financial products on the one hand debt yields continues to rise, on the other hand assets end interest rates have been increased public borrowing, "the investment bank explained," for the banks, listed companies are relatively high-quality customer base, in order to retain customers, banks issued to listed companies when liquidity loans tend to match sales of financial products, in order to yield financial products to cover the cost of increased interest rates rise. "

"Operationally, such as the essence of the company only needs two hundred million funds, which banks on the basis of the amount of the extra point, but requires listed companies to go beyond this part of the borrowed funds used to purchase financial products for banks, able to retain customers, completion of lending and financial management tasks, while companies can take to cover the rising cost of borrowing, both sides are willing to accept such an operation. So you can see, the listed companies to buy financial products, banks are often its counterpart of bank credit. "the investment bank It pointed out.