Recently Yahoo News on-line reported the following:
China’s $138 Billion Shadow Bank Spirals at Terrible Time
for Xi (1/2)
Bloomberg News
Mon, August 14, 2023 at 6:03 p.m. PDT
(Bloomberg) -- Founded in 1995 as a lumber business,
Zhongzhi Enterprise Group Co. grew to become a financial conglomerate with more
than 1 trillion yuan ($138 billion) under management. Now it risks becoming the
latest Chinese financial giant to fail.
The under-the-radar group, often dubbed China’s Blackstone
by local media, operates at the heart of China’s once high-flying shadow
banking market, which regulators have sought to corral since 2017. The firm has
now raised alarm bells across Chinese markets after affiliated firms missed
payments on some investment products.
Investors aren’t the only ones spooked by the implications of its possible demise. Chinese authorities have already set up a task force to study any possible contagion, with the banking regulator examining risks at Zhongzhi, according to people familiar with the matter.
Zhongzhi is one of the last free-wheeling private wealth managers that Beijing has been trying to rein in to minimize risks for the hundreds of thousands of retail clients who bought these high-yield products assuming they were safe. The timing couldn’t be worse for Xi Jinping’s government, as China is already struggling with a weak economy and fall out from the moribund property market that’s threatening to push giants like Country Garden Holdings Co. into default.
Zhongrong International Trust, part owned by Zhongzhi, is among the biggest firms in the country’s $2.9 trillion trust industry, which pools savings from wealthy households and corporate clients to invest in and make loans to real estate, stocks, bonds and commodities. The firm, which has missed at least two payments, has 270 products totaling 39.5 billion yuan due this year, according to data provider Use Trust.
This is “the one that everyone knew was going to blow up,” said Jason Hsu, chief investment officer at Rayliant Global Advisors. Zhongrong’s troubles are likely tied to its sales of investment products linked to real estate, he said.
Zhongzhi’s rise and potential downfall closely mirror China’s trajectory over the past three decades. The once booming economy is now mired in difficulties after a crackdown on private enterprise, including the nation’s celebrated tech firms, shocked investors. Consumer sentiment remains in the doldrums after years of stringent Covid restrictions.
It’s not the only firm in difficulties. A total of 106 trust products worth 44 billion yuan defaulted this year through July 31, according to Use Trust. Real estate investments accounted for 74% of the defaults by value. Last year also saw billions of dollars in defaults.
Zhongzhi is the second-largest shareholder of Zhongrong Trust, holding about 33%. The conglomerate also holds stakes in five other licensed financial firms, including a mutual fund manager and two insurers, and is invested in five asset management companies and four wealth units, according to its website. It also controls listed companies and owns 4.5 billion tons of coal reserves among its industrial operations.
(to be continued)
Translation
（彭博社）- 中植企業集團有限公司成立於 1995 年，最初是一家木材企業，後來發展成為一家管理資產超過 1 萬億元人民幣（1,380 億美元）的金融集團。 現在，它有可能成為最新一家倒閉的中國金融巨頭。
這家低調的集團經常被當地媒體稱為中國的黑石集團，其業務位於中國曾經風光無限的影子銀行市場的核心，監管機構自 2017 年以來一直試圖對其進行管控。由於其有聯繫的公司未能支付某些投資產品的款項，該公司現已在中國市場敲響了警鐘。
投資者並不是唯一對其可能崩敗的影響感到恐慌的人。 據知情人士透露，中國當局已經成立了一個工作組來研究任何可能散發開來的感染，銀行業監管機構也在審查中植的風險。
中植是最後一批的可以從心所欲隨而中國政府一直試圖控制的私人財富管理人之一，意圖以最大限度地降低數十萬散戶客戶的風險，這些客戶在自認為安全的情況下購買了這些高收益產品。 對於習近平政府來說，這個時機再糟糕不過了，因為中國已經在疲軟的經濟，和因掙扎中的房地產市場有可能迫使碧桂園控股有限公司等巨頭陷入違約而苦苦掙扎。
中植持有部分股權的中融國際信託是中國規模達2.9 萬億美元的信託行業中最大的公司之一，該行業匯集富了裕家庭和企業客戶的儲蓄以用作投資，並提供貸款用於房地產、股票、債券和大宗商品。 據數據提供商Use Trust稱，該公司至少錯過了兩次付款，今年有270種產品到期，總價值達395億元人民幣。
Rayliant Global Advisors 首席投資官 Jason Hsu 表示，這是
“一個每個人都知道會爆炸的” 。 他表示，中融的麻煩可能與其銷售與房地產相關的投資產品有關。
中植的崛起和潛在的衰落與中國過去三十年的發展軌跡密切相關。 在對包括中國著名科技公司在內的私營企業進行打壓令投資者感到震驚之後，曾經繁榮的經濟現在陷入了困境。 經過多年嚴格的新冠限制措施後，消費者信心仍然低迷。
它並不是唯一一家陷入困境的公司。 Use Trust的數據顯示，截至7月31日，今年以來共有106個信託產品違約，價值440億元人民幣。 按價值計算，房地產投資佔違約金額的 74%。 去年還出現了數十億美元的違約。
中植是中融信託第二大股東，持股約33%。 據其網站稱，該集團還持有其他五家持牌金融公司的股份，包括一家共同基金管理公司和兩家保險公司，並投資了五家資產管理公司和四個財富個体。 它還控制上市公司，其工業業務擁有45億噸煤炭儲量。
（待續）
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