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Chinese conglomerate Zhongzhi Enterprise Group is said to have slipped into a liquidity crisis after its Zhongrong International Trust has failed to make payment of trust products.
As of last Friday, three companies listed on the A-share market, namely Nacity Property Service, Xianheng International and KBC, have said in separate stock exchange filings that they haven not received the principal and yields of the trust products they bought from Zhongrong International Trust on time.
Nacity Property Service said that it had invested 30 million yuan in a trust scheme managed by Zhongrong due Aug. 8, but had not received the principal and yields. KBC Corp said it had invested 60 million yuan in two trust products managed by Zhongrong, and hadn’t received payment after they matured.
The announcements come amid market speculation that Zhongrong’s main shareholder, Zhongzhi Enterprise Group, is facing liquidity stress. Set up in 1995, Zhongzhi has expanded into a conglomerate with businesses ranging from chipmaking, healthcare, new energy vehicles and finance, according to its website. Its sprawling financial businesses include trust, asset management, insurance, futures, and wealth management
Zhongrong’s businesses faced “unprecedented challenges” as a property market downturn has triggered defaults by some developers, listed shareholder Jingwei Textile Machinery Co disclosed in its annual report on June 29.