Lenders brace for ac­cel­er­ated growth

China Daily (Canada) - - CHINA - ByWUYIYAO in Shang­hai wuyiyao@chi­nadaily.com.cn

The In­ter­na­tional Mon­e­tary Fund’s de­ci­sion to in­clude China’s ren­minbi in its Spe­cial Draw­ing Rights bas­ket will gen­er­ate more op­por­tu­ni­ties and present chal­lenges toChina’s peer-topeer or P2P lend­ing mar­ket, said mar­ket in­sid­ers.

In­clu­sion of the yuan in the IMF’s SDR bas­ket could mean fi­nance firms may see more cap­i­tal in­flows and in­vestor vis­its as the mar­ket is in­creas­ingly open­ing up to over­seas cap­i­tal and cross­bor­der in­vest­ment, said Fu Dong­hai, chair­man of Bei­jingComCredit Ltd, an on­line fi­nan­cial ser­vices firm.

Com­pe­ti­tion be­tween do­mes­tic on­line lenders and their over­seas coun­ter­parts will likely turn fiercer as the lat­ter are offering in­creas­ing num­ber of yuan-de­nom­i­nated prod­ucts, which ap­peals to do­mes­tic high net­worth in­di­vid­u­als or HNIs, said Fu.

China’sP2P­fi­nan­cial ser­vices are in great de­mand and the mar­ket size has been ex­pand­ing. They ex­tended 313.7 bil­lion yuan ($49.32 bil­lion) in loans in Septem­ber, up al­most 15 per­cent mon­thon-month and 490 per­cent year-on-year.

The amount is ex­pected to ex­ceed 400 bil­lion yuan by the end of this year, ac­cord­ing to data of Shang­haibased Ying­can Con­sul­tancy Ltd, which fo­cuses on re­search and con­sul­tancy ser­vices for P2P lend­ing through In­ter­net.

Big­ger play­ers in the mar­ket have al­ready been seek­ing to ac­cess more re­sources from cap­i­tal mar­kets through fund-raisin­gan­dini­tial pub­lic of­fer­ings.

For in­stance, Yirendai, an on­line con­sumer fi­nance mar­ket­place and a wholly owned sub­sidiary of Bei­jing­based Cred­itEase Ltd, is plan­ning to raise $100 mil­lion through its IPO on the NewYork Stock Ex­change.

Set up in 2012, Yirendai cur­rently has more than 7 mil­lion reg­is­tered users and has fa­cil­i­tated more than $10 bil­lion worth of lend­ing trans­ac­tions.

Yirendai’s Amer­i­can De­pos­i­tory Shares will likely be listed on the NYSE un­der the “YRD” sym­bol. If the IPO is suc­cess­ful, Yirendai would be­come the first Chi­nese P2P lender to be listed on the NYSE. It will start trad­ing some­time this month,

It is es­sen­tial to ... help mar­ket de­velop in a healthy and sus­tain­able way.”

ac­cord­ing to the com­pany’s dis­clo­sures to the stock ex­change.

Shang­hai-based Dian­rong. is also seek­ing up to $500 mil­lion in fund­ing, which could be the largest in­vest­ment in the sec­tor as the­com­pany plans to ex­pand over­seas, ac­cord­ing to Soul Htite, its CEO.

An­other Shang­hai-based firm, Shang­hai Lu­ji­azui In­ter­na­tional Fi­nan­cial As­set Ex­change (Lu­fax), was val­ued at nearly $10 bil­lion by in­vestors ear­lier this year. It is also preparing for its IPO, which could take place in the sec­ond or third quar­ter of 2016, and net up to $5 bil­lion, ac­cord­ing to a Xin­hua re­port.

Listing and fund-rais­ing by P2P play­ers are set to in­crease in 2016 as the mar­ket ex­pands, said an­a­lysts.

Ex­perts said that plat­forms need to en­hance their abil­i­ties in many as­pects when the mar­ket ex­pands and opens up, par­tic­u­larly in terms of risk man­age­ment, op­er­a­tional ca­pac­i­ties and abil­ity to win in­vestors and bor­row.

“Grow­ing non-per­form­ing loans and un­sta­ble fi­nanc­ing plat­forms have been ham­per­ing the growth of in­clu­sive fi­nan­cial ser­vices in China. To de­velop in a more healthy way, it is es­sen­tial to ed­u­cate in­vestors, and in­tro­duce poli­cies and reg­u­la­tions to help mar­ket de­velop in a healthyand­sus­tain­able­way,” saidMa Jun, chief re­searcher with Ying­can Con­sul­tancy Ltd.

Mar­ket in­sid­ers said cur­rently most of the P2P ser­vices are pro­vided to bor­row­ers and in­vestors in first- and sec­ond-tier cities in­clud­ing Beijing, Shang­hai and Shen­zhen, and coastal prov­inces with rel­a­tively higher av­er­age dis­pos­able in­come. De­mand for in­clu­sive fi­nan­cial ser­vices will in­crease rapidly in re­mote re­gions, said P2P pro­fes­sion­als.

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