Major Chinese wealth manager, «Noah Holdings», accused Hong Kong-listed company «Camsing International Holdings» of fraud in relation to a $490 million asset management product at risk of defaulting.
According to Bloomberg, Noah CEO and co-founder Wang Jingbo said in an internal memo that the company has filed a lawsuit and reported Camsing to regulators with regards to an asset management product valued at 3.4 billion yuan ($490 million).
Maturity of the product would be «extended by as much as one year to ensure payment», the noted also said.
Late last Friday, Camsing said in a statement that its chairwoman Lo Ching was being held «criminal custody» by Chinese authorities in Shanghai and that «the directors of the company were unaware of the reasons». Camsing stock subsequently plunged 90 per cent Monday morning.
Camsing is a Hong Kong-listed conglomerate with diversified businesses spanning across entertainment and healthcare.
Transparency still an issue
Transparency issues and hidden risks are ongoing hurdles for Chinese investors, renowned for their appetite for higher yielding investments (and, therefore, likely linked to smaller and more opaque companies), and Camsing’s troubles are yet another example.
But despite such issues, China's credit system continues to reform and has sparked sufficient confidence from foreign investors to include yuan-denominated bonds in the major global benchmark index.
Analysts also underline that recent economic headwinds may have contributed to the alleged fraud at Camsing, rather than ongoing, long-term risks. The firm had partnered with Noah for three years and has had a good track record with asset management products totalling more than 6 billion yuan ($870 million) having matured and been repaid.
