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A renaming craze to cash in P2P euphoria

WHAT’S in a name? The somewhat non-Shakespearean answer is money.

Or so it seems with Shanghai Duolun Industry Co, a property developer and building materials supplier that has joined the growing trend of listed companies trying to dress up their profiles by adding financial connotations to their names, whether justified or not.

The company announced on Sunday that it was changing its name to Pi Tu Pi Financial Information Services. Though its exact relationship with Internet finance wasn’t clearly spelled out, the company’s share price surged to the daily limit of 10 percent on the Shanghai Stock Exchange today, ending at 12.06 yuan (US$1.90) and boosting market value to 4.1 billion yuan.

As of May 10, 81 companies on the Shanghai and Shenzhen stock exchanges have announced name changes associated with digital technology and finance, according to data compiled by Shanghai Daily. The list includes Panda Fireworks Group Co, China’s largest fireworks maker, which changed its name to Panda Financial Co., and Baiyuan Trousers Co, which has become Kuajingtongbao, which means "cross-border financing express."

Duolun’s new name is an attempt to hop on board the peer-to-peer lending craze. That system provides online channels for individuals to lend to other individuals without going through the traditional banking system. Loan access is simplified and higher rates give lenders higher yields.  

The Shanghai Stock Exchange queried Pi Tu Pi on the name change, asking if the company is really qualified in the business its name suggests. The company replied that the new name has nothing to do with its existing business and no operations have started yet in the cyber-realm. However, the company did point to its website www.p2p.com. The website is headed with a slogan that says the new domain name is worth 1 billion yuan without giving any explanation.

Duolun 's sales last year slumped 91 percent to nearly 100 million yuan. The company blamed the decline on slower property sales in Tier 2 and Tier 3 cities in China.

Pi Tu Pi said in a statement that it is the “first listed domestic Internet financing company," but that may a bit of exaggeration given other companies are doing the same thing.

The rename announcement on Sunday coincided with central bank's latest interest cut, the third in six months. That allowed Pi Tu Pi to tag onto market euphoria about cheaper lending rates. At the same time, the reduction in the bank deposit rate may mean that more people will be enticed to shift their savings into higher-yielding online funds. 

Gu Lei, a professor at the Finance and Securities Research Institute of Renmin University of China, warned that securities regulators that they should ensure that the names of companies should reflect their true business operations so that consumers are duped.

"Companies should not be allowed to hype themselves by suggests business activities beyond core functions," Gu said.




 

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