The provincial government of the city of Shenzhen wants to take a close look at a branch of the. In a letter to investors, the Shenzhen Financial Supervisory Authority announced that it had obtained public assessments of the wealth management division Wealth and that a thorough investigation into the company’s problems would be initiated, reports the Reuters news agency.
The group is headquartered in the southern Chinese city. The agency also called on Evergrande and Evergrande Wealth to seek repayments to investors. The letter was sent after investors requested an investigation. Neither Evergrande nor the Shenzhen government commented on this.
Like other highly indebted conglomerates, Evergrande has sold high-yield investment products to investors, thus raising money for borrowing by circumventing government regulations. The company has over $ 300 billion in debt and has defaulted on customers, banks and bondholders. Evergrande let a deadline for bond interest pass on Friday.
The company’s crisis could make it harder for real estate firms to access credit, impair the quality of assets at certain banks and weaken the overall real estate market in China, which is a major engine of economic growth, said analyst Michael Taylor of the rating agency.
The Chinese central bank again pumped $ 15.5 billion into the financial markets on Monday after injecting three times as much last week. According to media reports, several local governments in China have set up special depots for Evergrande real estate projects.
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The problems of the real estate group are increasingly affecting other associated companies. The subsidiary New Energy Vehicle Group warned of a liquidity squeeze on Friday after the stock market closed, the shares temporarily collapsed by 26 percent on Monday.
How high is your crash risk in the depot? Real estate giant Evergrande may be on the verge of collapse. Banks and financial groups have invested their own or customer funds in the high-risk company.