Two Chinese companies Listed companies said over the weekend that they had not received payment for overdue investment products from Zhongrong International Trust Co, raising the tension to a financial market already shaken by the recession in the real estate sector.
The disclosure could add to market concerns about the health of Chinese conglomerate Zhongzhi Enterprise Group, which controls Zhongrong International and a handful of listed companies.
Nacity Property Service Group It said in a stock filing on Friday that it had invested 30 million yuan ($4.15 million) in a trust plan managed by Zhongrong due Aug. 8, but had not received principal payment or returns.
Another Shanghai-listed company, kbc corporationsaid it had invested 60 million yuan in two trust products managed by Zhongrong, and had not received the payment after its maturity.
The announcements occur in the middle of market talks posted on social media last week, alleging that Zhongrong’s main shareholder, Zhongzhi Enterprise Groupwas facing liquidity problems.
Created in 1995, Zhongzhi, Based in Beijing, it has become a conglomerate with businesses ranging from chip manufacturing, healthcare, new energy vehicles and finance, according to its website. Its extensive financial businesses include trusts, asset management, insurance, futures, and wealth management.
It also controls several publicly traded companies, including Tianshan Animal Husbandry Bio-engineering Co, Xinjiang Zhundong Petroleum Technology Co, Whole Shine Medical Technology Co, and Dalian MY Gym Education Technology Co.
Nacity Property and KBC did not disclose the underlying assets of Zhongrong’s unpaid trust products, which traditionally had considerable exposure to real estate.
Zhongrong’s businesses are facing “unprecedented challenges” as the fall of the real estate market led to defaults by some developers, publicly traded shareholder Jingwei Textile Machinery Co revealed in its June 29 annual report.
At the end of last year, Zhongrong managed 629 billion yuan in 1,633 trust products, according to Jingwei.
By the end of the first quarter, the trust companies they had invested 1.13 trillion yuan in real estate, accounting for 7.4% of total trust financing.
Source: Ambito
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