Editor-in-post writers, Copleader, P.D.

Since this year, real estate markets have become increasingly mobile, and many banks have raised doubts about the mortgage itself. They are required to lend private enterprises without collateral, which is intended to be good, but may change in practice.

The problem of private enterprise financing has recently been discussed. The difficulty of financing entrepreneurship is not a new problem, but it is particularly important in the context of the current environment. Not only is it a good sign that many private enterprises have been exposed to debt risks by a drilling cycle, that lending debts are being defaulted, that stocks are being mired, that there is collateral-spreading mines, and that the issue of the identity of private enterprises has also begun to be the subject of social media discussions.

Many places are now under way to launch a plumbing fund for private enterprises. This is, of course, good, and when private enterprises are embarrassed, they are properly helped and the coals are given. However, the details of how the Fund operates and how it guarantees the security of funds have yet to be resolved in practice. A slight shortfall would give rise to rent-seeking spaces. The power sector, which has a heavy toll, has a great discretion to help those who do not help. How to deal with the abuse of such power requires institutional development.

It is not a consistent topic for private enterprise financing. In entrepreneurship investment and private equity financing markets, private enterprises are the main players, with almost few seeing State-owned enterprises finding venture investments. From this point of view, market-level markets, or multi-tier capital markets, are in fact the key to addressing the difficulties of private enterprise financing.

We talk about the difficulty of financing private-sector enterprises, targeting mainly creditor financing or, further, bank lending. There is a lack of confidence in private enterprises, most do not have sufficient real property as collateral, and debt financing is indeed difficult. The risk management system of existing banks is to be broken if banks are unduly limited to lend to private enterprises. What we want to ask is banks ready? The answer is clearly negative.

Since this year, real estate markets have become increasingly mobile, and many banks have raised doubts about the mortgage itself. They are required to lend private enterprises without collateral, which is intended to be good, but may change in practice. We believe that there are several potential risks that have to be highlighted:

1. The bank requires a private enterprise to seek security from the State. In the case of a national business, there is no private enterprise with any incentive to guarantee it. In some cases, private enterprises may become a gateway to bank loans by State-owned enterprises, i.e., the final funds are used by the secured party. This does not serve the purpose of facilitating financial flows to private enterprises.

2. The bank manager’s relations receive loans. Under the policy of promoting private enterprise loans, such policies may be used by some of them as a means of channelling benefits, culminating in the flow of bank funds to stakeholders. In such cases, the quality of bank lending is a matter of concern. The capital markets also expressed doubts.

3. Inactive enterprises receive credit support. Private enterprises that should have been phased out in the context of the current market, such as a local champion that has just recently been promoted in a province, have received substantial credit support, supported by policy, to slow down insolvency. However, they did not have capital effects by taking credit. Some have even become financial black holes. In such cases, the rate of bank failure will also increase.

All three of the above are likely to arise in the case of loans to private enterprises from current banks.

In addition to bank loans, some of the funds are provided to companies that are at risk of stock pledge. I asked about the problem of the daily stock holdings, and then what exactly the stock was spent?

I think there are several possibilities: (a) to invest in real estate; (b) to move out; (iii) to equate stocks; and (iv) to invest in specific projects.

Many of the group companies listed are engaged in real estate or major shareholders. A number of active companies, the local government, in particular through land distribution, recruit them to develop real estate. As a result, when the equity bonded funds entered the real estate market, they would find that liquidity was significantly frozen. As a result of the high rate of degradation, some investments have been cut off and cash flows are insufficient to return interest on debt, resulting in default.

Some shareholders have received more money to buy stocks, especially in their own companies, which will be more forthcoming in 2015. Proclamation, the sum of money that has been set aside for their own shares, the continuation of the pledge after a high level, and the continuation of the baggage, is in fact an act of leverage. Once the price declines, it will thrive around the mine, throw down, irretrievably, and even lead to unstable control over shareholders — much we saw in 2018.

There are also shareholders who, in a variety of ways, have transferred the sums of the pledge to the outside country. This part of our assessment is not good, but, for this shareholder, pledge is equivalent to a reduction in hold — a reduction in possession of many restrictions, but a much lower limit on pledge — At the outset, they had no intention of returning loans on pledge, and they had used the pledge itself as a key precipitation.

If three of the above are the case, there is a very high moral risk that the Fund will help these listed companies. The marketed company does not have a plan to operate the company, or the main shareholders, and it has been intended to leave the boat, and even if it is entered, it is sitting on a boat without a captain and is entirely random. Some of the strand funds have used relief as a market subject for private buyers, with little consideration being given to the operational level, bearing in mind that the casings are very large and in no way as simple as imaginative. What is more expensive to buy than to sell, the stock is shattered and sold to the garage fund, and who will be behind?

Thus, from the above discussion, I think that the direct manipulation of State-owned capital, or the fact that a knife allows a bank to lend to a private enterprise, is not a good way of resolving the difficulties of financing private enterprises and restoring confidence in private enterprises. At a larger level, restoring the confidence of private enterprises requires improving the rule of law and acting in accordance with the law,