BEIJING/SHANGHAI, Aug 17 (Reuters) – A liquidity disaster at certainly one of China’s high asset managers Zhongzhi Enterprise Group has fuelled worries that the nation’s deepening property sector disaster is spilling over into its $57 trillion monetary trade, even because the economic system is weakening.
The group will conduct a debt restructuring, traders sources instructed Reuters after being briefed by administration, a video seen by Reuters confirmed, after a belief agency managed by the group missed funds on dozens of funding merchandise.
Zhongzhi’s hassle has raised worries of a contagion threat to the monetary sector if different belief companies default on reimbursement obligations within the $3-trillion shadow banking trade, which historically has had excessive publicity to the property trade, which is in a deepening droop.
Listed below are 5 information about Zhongzhi:
* Beginning off with timber and actual property trades within the Nineteen Nineties, Zhongzhi shortly expanded into companies starting from chipmaking, healthcare, new power automobiles and finance, in accordance with its web site. Its monetary companies embody belief, asset administration, insurance coverage, futures, and wealth administration.
* The group is a shadow banking empire, managing over 1 trillion yuan ($136.85 billion) in belongings. It holds stakes in 5 asset administration firms, 4 wealth administration companies, and has a 33% stake in Zhongrong Worldwide Belief, a significant belief firm, which bought opaque belief merchandise to particular person in addition to institutional traders promising as a lot as 6%-7% return, in comparison with the benchmark one-year financial institution deposit charge of 1.5%.
* Xie Zhikun, the billionaire founding father of Zhongzhi, died in December 2021 after struggling a coronary heart assault in Beijing. Xie’s spouse is standard singer Mao Amin, and he’s the brother of Xie Zhichun, former govt director of Central Huijin.
* Zhongzhi has been promoting stakes in some listed firms it managed over the previous few years, and decreasing the dimensions of it enterprise, after coming underneath strain within the wake of China’s crackdown on shadow banking, and the property market downturn.
* Nonetheless, Zhongrong, which manages greater than 700 billion yuan of belongings, has a relatively excessive publicity to the actual property sector in comparison with its friends. Zhongrong Belief’s actual property funding publicity accounted for 10.7% of its complete belongings underneath administration as of the top of 2022, greater than trade common of 5.8%, in accordance with a report from Citigroup.
($1 = 7.3074 Chinese language yuan renminbi)
Reporting by Ziyi Tang and Ryan Woo in Beijing, Shanghai Newsroom; Enhancing by Sumeet Chatterjee and Kim Coghill
Our Requirements: The Thomson Reuters Belief Rules.