China´s shadow banking industry escaped narrowly a major default in the last week of January, but more troubles is building up for the rest of 2014 as more trust funds are running into trouble, including gold mine scams, tells financial analyst Sara Hsu in the South China Morning Post.
The South China Morning Post:
Despite evidence that underlying assets are failing in certain products, investor losses have been kept to a minimum as local governments or state-run institutions front the cash to maintain investor confidence.
“My gut tells me that some big cases will be uncovered” given the slowdown in economic growth, said Sara Hsu, a professor at the State University of New York at New Paltz and an expert on shadow banking.
“There has been a massive inflow of liquidity into infrastructure and property development up until this period, and where there are large liquidity inflows in a bubble environment, there is huge potential for the propagation of financial fraud.
“The trust products that have failed so far have often had rumours of financial fraud associated with them.”
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