Chinese wealth manager Zhongzhi Enterprise Group has filed for bankruptcy liquidation. This adds to worries about spillover from the property sector to the financial sector.
Zhongzhi Enterprise Group has filed for bankruptcy liquidation, according to a court statement in Beijing, due to its inability to repay debts. The court accepted Zhongzhi’s application.
Worries at the Beijing-based wealth manager first emerged in July after payments were missed for dozens of investment products at Zhongrong International Trust Co, a trust company controlled by Zhongzhi. Investors were told in August by Zhongzhi about the liquidity crisis and rescue plans, including the option of bankruptcy. In November, it apologized to investors and said it had up to $64 billion in liabilities.
Separately, police in Beijing later launched an investigation into suspected crimes committed by Zhongzhi, including multiple suspects involved with the company.
Property Worries
Zhongzhi is a major player in China’s $3 trillion shadow banking sector with sizeable exposure to China’s property sector.
In December, rival wealth manager Hywin launched a probe into missed payments on investment products. Hywin is based in Shanghai and its products are primarily invested in real estate.
