Asia markets tentative ahead of Opec meeting

Wednesday 2.30am GMT Overview Markets across Asia were treading cautiously on Wednesday, following mild overnight gains for Wall Street, a weakening of the US dollar and as investors turned their attention to a meeting between Opec members later today. What to watch Oil prices are in focus ahead of Wednesday’s Opec meeting in Vienna. The […]

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Banks, Financial

RBS emerges as biggest failure in tough UK bank stress tests

Royal Bank of Scotland has emerged as the biggest failure in the UK’s annual stress tests, forcing the state-controlled lender to present regulators with a new plan to bolster its capital position by at least £2bn. Barclays and Standard Chartered also failed to meet some of their minimum hurdles in the toughest stress scenario ever […]

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Barclays: life in the old dog yet

Barclays, a former basket case of British banking, is beginning to look inspiringly mediocre. The bank has failed Bank of England stress tests less resoundingly than Royal Bank of Scotland. Investors believe its assets are worth only 10 per cent less than their book value, judging from the share price. Although Barclays’s legal team have […]

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Currencies, Equities

Scary movie sequel beckons for eurozone markets

Just as horror movies can spook fright nerds more than they expect, so political risk is sparking heightened levels of anxiety among seasoned investors. Investors caught out by Brexit and Donald Trump are making better preparations for political risk in Europe, plotting a route to the exit door if the unfolding story of French, German […]

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Dollar rises as markets turn eyes to Opec

European bourses are mirroring a tentative Asia session as the dollar continues to be supported by better US economic data and investors turn their attention to a meeting between Opec members. Sentiment is underpinned by US index futures suggesting the S&P 500 will gain 3 points to 2,207.3 when trading gets under way later in […]

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Categorized | Financial

Fosun chairman calls P2P market a ‘scam’

Posted on August 31, 2016

Fosun Group Chief Executive Officer Guo Guangchang Interview...Billionaire Guo Guangchang, chairman and chief executive officer of Fosun Group, pauses during an interview in New York, U.S., on Thursday, April 23, 2015. Guo is the largest shareholder of Shanghai-based Fosun Group, China's biggest closely-held investment firm, with interests in real estate, retailing and gold mining. Photographer: Michael Nagle/Bloomberg *** Local Caption *** Guo Guangchang©Bloomberg

Guo Guangchang, chairman of Fosun Group

China’s self-styled “Warren Buffett” and billionaire businessman Guo Guangchang on Wednesday called the country’s Rmb440bn ($65.9bn) peer-to-peer lending market “basically a scam”, becoming the latest high-profile executive to attack an industry that has been plagued by scandal.

The comment from Mr Guo, chairman of Fosun Group, China’s biggest privately owned conglomerate, has added to the fierce debate over China’s P2P lending market and comes just days after the government imposed new rules on the size of such operations.

    The industry, which has grown rapidly over the past four years, is based on a business model in which individual lenders are matched with borrowers via online platforms. The loans often pay out high yields.

    The sector has been lauded for providing an alternative to low-interest deposits but has more recently gained a reputation for hosting some of the biggest scams involving retail investor cash in China’s recent financial history, incurring the wrath of some of the country’s top business people as well as the regulators.

    Mr Guo made the remarks at a press conference in Hong Kong following the release of the company’s interim results. Another Fosun executive emphasised that the company, known for using insurance premiums to make investments abroad, had never dabbled in the P2P business.

    Earlier this month, the president of Ping An Insurance, China’s second-largest insurer, told the Financial Times that most P2P lenders were “fakes” and that the vast majority of China’s P2P lenders would not be able to continue their business in the future.

    The president of Ant Financial Services, a subsidiary of Alibaba that houses the group’s payments and credit scoring platforms, has also tried to distance the company from China’s broader P2P lending market.

    That large financial companies would lambast P2P lending comes as no surprise.

    Within the past year, ordinary Chinese people have fallen victim to scandals in which online financial platforms have disappeared with billions of dollars, provoking angry protests on the streets.

    In February, more than 20 people were arrested for their involvement in Ezubao, a “complete Ponzi scheme”, that allegedly took more than Rmb50bn ($7.6bn) from investors, China’s biggest case of financial fraud to date. A month later, a court in southern China jailed 24 people for defrauding about 230,000 investors of nearly Rmb10bn in a similar scam.

    In response to such problems, the regulator last week issued rules forbidding online lenders from accepting deposits or guaranteeing principal or interest on loans they facilitate. It also capped borrowing at Rmb1m for individuals and Rmb5m for companies.

    Mr Guo has been no stranger to controversy himself. The Fosun chairman disappeared for several days in December, only to re-emerge claiming he had been assisting an investigation in China. The group subsequently walked away from a deal to buy an Israeli insurance company.

    Fosun is known for its leisure and entertainment holdings such as France’s Club Med and a stake in Canada’s Cirque du Soleil. During the past two months alone, it has acquired Gland Pharma in India, UK football club Wolverhampton Wanderers and Brazilian fund manager Rio Bravo Investimentos, and taken a stake in Portuguese lender Banco Comercial Português.