Investor Presentaiton
Examples of asymmetric risk perception equilibrium
Example 1 (Trust products)
China Credit Trust company raised RMB 3 billion through a trust product called "Credit Equals
Gold No.1" in 2011, which was sold to hundreds of high net worth investors through ICBC.
Investors believed they were buying something with an implicit guarantee from the bank. There
are anecdotal evidences that local bank branch managers told investors that the product is safe.
The fund raised by the trust product was channelled to Zhenfu Energy company for new projects
in coal mining industry in Shanxi province and the product promised investors a yield of 10 per
cent in the next three years.
In the end of 2013, it became clear that the Zhenfu cannot pay 3 billion back to the trust company
due to deteriorating profits in the coal mining industry.
The market became more nervous when ICBC refused to bail out.
Under this intense glare, China Credit Trust announced in the last minute that it had reached an
agreement with an unnamed third party to sell the shares it held in the Zhenfu so that the investors
is offered a deal to recoup their principle and only three percent of interest.View entire presentation