Source: Bloomberg

Just a week ago, few people in China noticed that China -planting Enterprise Group was almost unheard of in other places.

Now, this mysterious shadow bank giant has become the latest symbol of the financial vulnerability of this $ 18 trillion economy, and the confidence of investors, enterprises and consumers is rapidly dissipating.

After paid to thousands of customers, this private company with a management scale of more than 1 trillion yuan and its trust companies are being tuned.Regulatory agencies have set up a working group to find risks to prevent the situation from spreading.It is reported that the company has hired KPMA to audit, and the process of debt restructuring will be expected to last long.The company may sell assets in the future and will also impact a wider market.

The problem of

Planting even triggered protests, and the police began to intervene, asking for angry investors not to protest publicly.As the news that China was trapped in the predicament spread, China's assets fell sharply, and the RMB exchange rate fell to a low point in nearly 16 years.As the outside world is increasingly worried that there are more problems in China's US $ 99 trillion trust department, the central bank's interest rate cut this week has little effect on boosting confidence.

Kathy Lien, managing director of

BK Asset Management, said in an interview with BNN Bloomberg TV on Thursday that with more funds overdue payment, this problem will only intensify.She said that they (referred to as Beijing) only did so much, she said it was a "crisis of confidence."

China is already in response to weak economic, real estate downturn, and geopolitical tensions with the increasingly increasing United States. The crisis of shadow banking is another challenge.

For Zhongzhi, the situation quickly turned sharply. In China's opaque financial industry, this is the latest signs of implicit risk.Last Friday, the three documents submitted by the Shanghai Stock Exchange exposed the incident. These documents sounded the alarm to the overdue payment of high -yield investment products of the company and Zhongrong Trust.Zhongrong Trust is a trust company closely related to Zhongzhi.

Zhongrong is the top ten trust companies. This industry mainly brings together savings from wealthy personal investors and enterprises, investing in stocks, bonds and other assets. At the same time, it provides loans to companies that cannot communicate with traditional banks.According to Bloomberg's economic research, the asset management regulations of the trust industry are almost equivalent to 10%of China's total loans.

According to data providers, USE Trust said that 270 products in Zhongrong this year expired, with a total value of 39.5 billion yuan.

In order to attract cash, the one -year interest rate provided by trust companies such as Zhongrong is as high as 6%or 8%, which is about twice the interest rates of similar products in commercial banks.As the Chinese stock market plummeted and real estate fell for two consecutive years, these products attracted trillions of RMB.

Joey, a customer in northern China, bought it very much. She invested in about 2 million yuan to buy four kinds of China Rong products, with 4%to 6%.A few neighbors also invested.After stopping the redemption in June, she now wants to know if she can get any funds.She asked the local regulatory agencies and police for help without results.

Joey said that they were desperate, and for privacy, she refused to disclose her full name.

Jiezhi was founded in 1995. It was originally a wooden company. After he issued money in the printing industry, he died in 2021 and died in 2021.

Planting has taken action before the problem exposure.People familiar with the matter earlier said that in the case of liquidity tightening, the China -plant Enterprise Group hired KPMV to audit its balance sheet.Since the incident has not been made public, people familiar with the matter are required to be anonymous.People familiar with the matter said that the company headquartered in Beijing plans to reorganize debts and sell assets after auditing to repay investors.

It is unclear how many products are breaking in the contract, and if the company has enough assets to make up for the gap after liquidation.

In recent years, even if the opponent's trust company is reducing risks, China Planting and its related companies (especially Zhongrong Trust) still provide financing to developers who are in trouble and buy assets from Evergrande Groups such as Evergrande Group.

The decline in the crackdown and sales of real estate loans during the epidemic ?? Large a series of defaults, and real estate -related investment was in trouble.As the economy continued to slow, even the developers such as Country Garden and others who survived the first wave of shocks also faced pressure.Last month, the largest decline in Chinese house sales in the past year, and Country Garden was on the edge of breach of contract due to failure to pay the interest expired bond interest.

Trust companies such as the downturn in the property market are facing cash tightly, and these trust companies relied on investment and loans to pay the storeders.According to Bloomberg economic research, it is estimated that 10%of the total assets of the trust (about 300 billion US dollars) are related to the real estate industry.

There is nothing new to have problems in the trust industry, but the scale of Zhongzhi is worried about the outside world.According to data from USE Trust, as of July 31, about 106 trust products in this year broke the contract with RMB 44 billion.Based on value, real estate investment accounts for 74%of the amount of default.Last year, there were billions of dollars in breach of contract.

Fitch Creditsights analysts Zerlina Zeng and Karen Wu said in a report that breach of contract may continue to be unfavorable to investors and market emotions.The disorderly liquidation of any large trust or wealth management company may test the recent financial stability.

According to people familiar with the matter, the State Administration of Finance and Administration of China established a working group last month in order to find out the non -payment debts and risks of Zhongrong International Trust Co., Ltd.People familiar with the matter said that the State Administration of Finance also requested the company to report the payment plan and which assets to deal with to deal with liquidity tensions.

Trivium CHINA analyst Dinny McMahon said that although the dilemma of Zhongzhi is unlikely to affect large commercial banks, if rich investors begin to withdraw money, this dilemma may spread to other asset management companies.

Mcmahon said that when investors begin to lose confidence, a company's ability to continue raising new funds will suddenly become worse.Then the possibility of breach of contract becomes greater and greater.