Another Shanghai-listed company, KBC Corp. said it had invested 60 million yuan in two trust products run by Zhongrong, and had not received payment after its maturity.
The announcements come amid market talk on social media last week, which said Zhongrong’s main shareholder, Zhongzhi Enterprise Group, was facing liquidity problems.
Created in 1995, Beijing-based Zhongzhi has grown into a conglomerate with businesses ranging from chip manufacturing, healthcare, new energy vehicles and finance, according to its website. Its extensive financial businesses include trusts, asset management, insurance, futures, and wealth management.
It also controls several listed companies, such as Tianshan Animal Husbandry Bio-engineering, Xinjiang Zhundong Petroleum Technology, Whole Shine Medical Technology, and Dalian MY Gym Education Technology.
Nacity Property and KBC did not disclose the underlying assets of Zhongrong’s unpaid trust products, which traditionally had considerable exposure to real estate.
Zhongrong’s businesses are facing “unprecedented challenges” as the downturn in the property market has led to defaults by some developers, publicly traded shareholder Jingwei Textile Machinery Co reveals in its June 29 annual report.
At the end of last year, Zhongrong managed 629 billion yuan in 1,633 trust products, according to Jingwei.
By the end of the first quarter, trust companies had invested 1.13 trillion yuan in the real estate sector, accounting for 7.4% of total trust financing.