Two years ago, the financial world had its eyes on Evergrande, fearing that the fall of this Chinese real estate giant would contaminate the entire economy of the country. Now a new Chinese group is in turmoil. It is a highly leveraged asset manager. Beijing police have just opened an investigation.
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The investigation was opened in Beijing, where the group is based, and it would relate to alleged offenses, not specified by the police.
Zhongzhi, the name of the company, is little known to the general public. And yet, it is one of the most important players in the market. A large number of Chinese companies and wealthy individuals have entrusted their savings to him.
For decades, many developers have used companies specializing in asset management to finance their projects. But the real estate crisis caused by fall of Evergrande and a slowdown in the national economy have thrown these companies into turmoil.
This is the case of Zhongzhi, who now says he is insolvent. Its debt would amount to 60 billion euros, according to a letter addressed to investors.
According to experts, the setbacks of the group and its subsidiary ZTR risk having disproportionate consequences for the financial system in China.
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