Article/Xiang Xiaotian, columnist of Sina Financial Opinion Leader (WeChat official account kopleader)
Since this year, the liquidity of the real estate market has become tighter, and many banks have doubts about the collateral itself. It is a good idea to ask them to lend to private enterprises that lack collateral, but in the process of actual implementation, their actions may change.
Recently, private enterprises have been discussing the difficulty of financing. The difficulty of private enterprise financing is not a new problem, but it is particularly important in the current environment. Not only did a round of deleveraging expose many private enterprises to debt risks, loan and debt defaults continued, stock pledges were mired in trouble, and serial guarantees exploded. More importantly, the identity of private enterprises began to become the subject of social media discussions, which was not a good omen.
Now many places have launched private enterprise rescue funds. This is of course a good thing. When private enterprises are in danger, we should help them properly. However, the details of how the bailout fund operates and how to ensure the safety of funds need to be solved in practice. A little carelessness will lead to a lot of rent-seeking space. The power department with a large amount of money has a great discretion over who to help and who not to help. How to prevent and control the abuse of the power in hand needs institutional construction to keep pace.
The difficulty of private enterprise financing is not a consistent topic. In the venture capital and private equity financing markets, private enterprises are the protagonists, and few state-owned enterprises are looking for venture capital. From this point of view, the primary market, or multi-level capital market, is actually the key to solving the financing difficulties of private enterprises.
The reason why we talk about the difficulty of private enterprises' financing is mainly debt financing, or further, bank loans in a larger scope. Private enterprises lack credit enhancement means, and most of them do not have enough real estate as collateral. Debt financing is really not easy. If the banks are excessively restricted to lend to private enterprises, the existing risk management system of banks must be broken through. Our question is, is the bank ready? The answer is clearly no.
Since this year, the liquidity of the real estate market has become tighter, and many banks have doubts about the collateral itself. It is a good idea to ask them to lend to private enterprises that lack collateral, but in the process of actual implementation, their actions may change. We believe that there are several potential risks that we must pay attention to:
1) Banks require private enterprises to find state-owned enterprises to guarantee 。 For state-owned enterprises, unrelated private enterprises have no incentive to guarantee them. In some cases, private enterprises may become a channel for state-owned enterprises to lend to banks, that is, the final funds are used by the guarantor. This will not achieve the goal of promoting the flow of funds to private enterprises.
2) Related accounts of the bank management obtain loans 。 Under the policy of promoting private enterprise loans, this policy may be used by some insiders as one of the means of conveying benefits, which ultimately leads to the flow of bank funds to stakeholders. In this case, the quality of bank loans is worth worrying. The capital market also expressed doubts.
3) Zombie enterprises get credit support 。 Private enterprises that should have been eliminated in this round of market clearing, such as a local leading enterprise recently supported by a province, have received a large amount of credit support with the support of policies, delaying the progress of bankruptcy. But they took up credit and did not play the role of capital. Some even become capital black holes. In this case, the non-performing ratio of banks will also increase.
The above three are all the situations that banks are likely to lend to private enterprises at present.
In addition to bank loans, part of the funds is to help companies that are caught in the risk of stock pledge. I asked a question before that there was a risk in Tianliang's stock pledge. So, where did the money from the stock pledge go?
I think there are several possibilities: 1) Invested in real estate; 2) Transfer out of China; 3) Stock speculation; 4) Specific investment projects 。
Many group companies or major shareholders of listed companies are engaged in real estate. Some companies that have done a good job in the industry, and the local government also solicited them to develop real estate through land delivery and other means. Therefore, when the funds borrowed from the stock pledge enter the real estate market, they will find that the liquidity has been greatly frozen. Due to the sharp decline in the pace of degenerating, some investments have run out of funds, and the cash flow is insufficient to repay the debt interest, resulting in default.
Some shareholders took out the money to speculate in stocks, especially their own companies, which was more common in 2015. Pledge: the borrowed money is used to speculate on its own stock, and then continue to pledge after speculation. The borrowed money continues to speculate, which is actually an act of increasing leverage. Once the stock price falls, it will step on a chain of landmines, and the most dangerous situation will even lead to the instability of the controlling shareholder's control - as we have seen in many cases in 2018.
Some shareholders, through various ways, transferred the money from the pledge to overseas. We don't like to comment on this part, but for this part of shareholders, pledge is equivalent to reduction of holdings - there are many restrictions on reduction of holdings, but there are far fewer restrictions on pledge - they didn't intend to repay the pledged loans at the beginning, and they regard pledge itself as a one click clearance behavior.
In the case of the above three situations, there will be great moral hazard if the rescue fund rescues these listed companies. Neither the actual controller nor the major shareholders of the listed company have any plan to operate the company, and they have planned to abandon the ship and escape. Even if the rescue fund goes in, it will also take a ship without a captain. It is totally random where it can go. Some rescue funds regard the rescue as an opportunity to buy private enterprises to list on the market, with little consideration on the business level, but also remember that there are many holes in shell buying, which is not as simple as imagined. As the saying goes, what you buy is not as good as what you sell. The stock pledge is all out. If you sell it to the rescue fund, who will suffer?
Therefore, from the above discussion, I believe that direct trading of state-owned capital, or making banks lend to private enterprises across the board, is not a good way to solve the financing difficulties of private enterprises and restore their confidence. On a large scale, to restore the confidence of private enterprises, we need to improve the legal system and act in accordance with the law. Policies cannot be changed according to people's wishes. From the middle level, tax reduction is more effective than providing financial support, and also reduces the space for rent-seeking. From the micro level, vigorously developing the multi-level capital market and making the stock market prosperous is the best way to solve the financing difficulties of private enterprises.
To vigorously develop the multi-level capital market, I think the current work can be done is: 1) Launch the Science and Technology Innovation Board as soon as possible, improve various rules and regulations for the listing of the Science and Technology Innovation Board, and act in strict accordance with the rules and regulations; 2) Private enterprises registered in China are allowed to issue shares in the Hong Kong capital market. This does not occupy A-share capital, but also can finance from the international capital market back to the mainland. This kind of thing should be encouraged; 3) The supervision of VC/PE market should be moderately relaxed, and the registered private fund managers should reduce direct business intervention and encourage them to carry out direct investment in private enterprises 。
(The author of this article introduces that he was born in the southwest of Hubei Province. His works are funny and humorous, which are widely loved by people.)
