Risks lurk in P2P sec­tor, rat­ings agency warns

China Daily (Canada) - - FRONT PAGE -

were not com­pre­hen­sive. They have dif­fi­cul­ties in pay­ing their debts, in achiev­ing prof­itabil­ity, and in man­age­ment,” saidWang.

He said that th­ese prob­lems have se­ri­ously un­der­mined the lenders’ cred­i­bil­ity and will have an ad­verse im­pact on liq­uid­ity.

Money raised by the plat­forms mainly flowed into real es­tate and the in­ter­bank mar­ket in­stead of to cash-starved small and medium-sized en­ter­prises, Wang said.

Trans­ac­tions in­volv­ing P2P plat­forms dou­bled to 250 bil­lion yuan ($41 bil­lion) in 2014, ac­cord­ing to the In­ter­net So­ci­ety of China.

On­line P2P lend­ing uses the In­ter­net to con­duct daily trans­ac­tions or fi­nance busi­nesses.

Given their lower trans­ac­tion costs, on­line wealth man­age­ment prod­ucts al­low in­vestors an al­ter­na­tive to tightly con­trolled in­ter­est rates. But the largely un­reg­u­lated mar­ket is rife with money laun­der­ing, fraud and il­le­gal fundrais­ing.

Dagong found that plat­forms with larger regis­tered cap­i­tal tend to re­ceive bet­ter rat­ings.

Trans­ac­tion vol­umes, in­vest­ment poli­cies and the num­ber of in­vestors also in­flu­ences the risk level.

Shang­hai-based lu­fax.com was the only lead­ing on­line lender on the early warn­ing list pro­vided by Dagong. The site, un­der Ping An In­surance (Group) Co of China Ltd, has more than 800 mil­lion yuan in regis­tered cap­i­tal.

Dagong did not spec­ify why lu­fax.com was clas­si­fied as a lender with “ab­nor­mal in­vest­ment risk”.

Calls for com­ment to the pub­lic af­fairs of­fice at Ping An went unan­swered.

South China’s Guang­dong prov­ince has the largest num­ber of P2P lenders on the alert list, ac­cord­ing to Dagong.

Re­gions with a vi­brant pri­vate sec­tor have more pro­nounced on­line lend­ing prob­lems than the less-de­vel­oped places, it said.

De­spite the in­creas­ing risks, the In­ter­net-based lend­ing mar­ket is set to ex­pand in 2015, re­searchers have said.

In­dus­try con­sul­tancy IDC said the high pen­e­tra­tion rate of the In­ter­net in China will al­low on­line lend­ing to reach more ar­eas this year.

And with in­dus­try reg­u­la­tions likely to be in place be­fore year-end, the In­ter­net fi­nance sec­tor will ex­ert in­creas­ing pres­sure on bricks-and-mor­tar lenders, IDC said.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.