Talk about a shady business. China Cinda Asset Management has registered to list in Hong Kong. Those initiated with the history of the country’s debt – an annal as thick as the Chinese classic Three Kingdoms – will remember that Cinda was the biggest of four companies established in the late 1990s to buy up and manage debt at state banks.
The question that should be on everyone’s minds is: Why is this company still around? And what happened to the RMB1.4 trillion in debt it supposedly took on?
Well, Cinda has been packaging and repackaging those toxic assets for more than a decade. Financial engineers at the company made a breakthrough earlier this year when they realized the debt was taking on a physical form – an ooze similar to Mattel’s Slime product of the mid-70s but with the fragrance of cheese hot dogs. Cinda has reportedly opened several upholstery firms and has got workers stuffing the gunk into pillows, mattresses and cushions. This alone will make the company a great buy when it lists later this year.
It’s well known that China suffers a dearth of financial regulators, and there’s word a new agency will be set up, possibly to regulate plasma-like debt packages. If anything, the country could certainly use a regulatory body to oversee the supervisors that regulate its minders.
China Economic Review recommends that the guy who thinks up all the longwinded acronyms for organizations around here should consider calling this new one FUSOFRCMDP, or the Federation of Upholsterers for the State Organization for Regulating Confusing and Misleading Debt Products.
Reports on the mismanagement of financial products are rife these days. In the insurance sector, Shanghai’s Fanxin Insurance Agency was reportedly selling faulty wealth management products. We hear they were a repackaged version of life insurance policies for Chinese miners – now that’s a toxic asset. The boss, Chen Yi, was picked up by Chinese police in Fiji with about US$80 million stuffed inside her bikini draw. Customs officials in the island nation said they didn’t take notice of the large sum of money because just about every Chinese person comes with a chest full of dollars.