One of China’s biggest and most established banks made the investment seem like a sure bet: Buying barrels of crude oil would make investors money whether the price rises or falls, the bank said.
That was not exactly true. When global oil prices crashed last month in the middle of the coronavirus crisis, those who had bought the investment product, called Crude Oil Treasure, lost their money and then some. Because of a quirk in global oil markets, Bank of China said, investors owed the lender even more money, specifically $37.63 for every barrel they had bought.
The outrage that followed has exposed the plight of small investors in the world’s second-largest economy. They have few safe places to park their money. They enjoy limited legal protections compared with investors in other countries. And when they protest, they are often silenced by the authorities.
For Beijing, the timing is problematic. Many people in China are struggling to overcome the economic devastation caused by the coronavirus outbreak. The country’s lawmakers are set to meet on Friday for their delayed annual legislative session. Angry, outspoken investors would make for an unwelcome image.
@ NYTimes