SHANGHAI : Two Chinese listed companies said over the weekend that they had not received payment on maturing investment products from Zhongrong International Trust Co, adding to stress in a financial market already roiled by a property sector downturn.
The disclosure could deepen market concerns over the health of Chinese conglomerate Zhongzhi Enterprise Group, which controls Zhongrong International and a handful of listed companies.
Nacity Property Service Group said in an exchange filing on Friday that it had invested 30 million yuan ($4.15 million) in a trust scheme managed by Zhongrong due Aug. 8, but had not received the principal and yields.
Another Shanghai-listed company, KBC Corp, said it had invested 60 million yuan in two trust products managed by Zhongrong, and hadn’t received payment after they matured.
The announcements come amid market chatter on social media over the past week that Zhongrong’s main shareholder, Zhongzhi Enterprise Group, is facing liquidity stress.
Zhongzhi could not be reached out of business hours on Sunday.
Set up in 1995, Beijing-based Zhongzhi has expanded into a conglomerate with businesses ranging from chipmaking, healthcare, new energy vehicles and finance, according to its website. Its sprawling financial businesses include trust, asset management, insurance, futures, and wealth management.
It also controls several listed 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 didn’t disclose the underlying assets of the defaulted trust products by Zhongrong, which traditionally had a sizable exposure to real estate.
Zhongrong’s businesses faced “unprecedented challenges” as a property market downturn has triggered defaults by some developers, listed shareholder Jingwei Textile Machinery Co disclosed in its annual report on June 29.
At the end of last year, Zhongrong managed 629 billion yuan in 1,633 trust products, according to Jingwei.
At the end of the first quarter, trust firms had invested 1.13 trillion yuan in the real estate sector, accounting for 7.4 per cent of total trust financing.
($1 = 7.2367 Chinese yuan renminbi)
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