Spreading Chinese Real Estate Crisis... Investor Protests Over Zhonglong Payment Suspension

Crisis Spreads to Financial Markets
"Real Estate Financing Conditions May Tighten"

Chinese real estate trust company Zhongrong International Trust has failed to return investors' funds on time due to a liquidity crisis, spreading a sense of crisis surrounding the real estate market into the financial sector.

On the 16th (local time), Bloomberg reported that about 24 protesters were demonstrating near Zhongrong International Trust's office, demanding the return of their investments. On WeChat, a Chinese social networking service (SNS), posts criticizing Zhongrong for delaying cash payments have also been posted. The report stated, "These protests show how the impact of China's real estate downturn is spreading to the financial sector," adding, "Many trust products sold not only by Zhongrong but also by other companies are managed through housing projects with problems, such as Evergrande."

Exterior view of Beijing Zhonglong International Trust office (Photo by Bloomberg News)

Wang Chang, secretary of Zhongrong's board, reportedly told investors at a meeting earlier this week that the company had failed to make cash payments on several products that matured on the 8th and that payments on more than 10 products had already been delayed since late last month. One of the sources cited by the news agency added that payments on at least 30 products were overdue and that Zhongrong had also suspended repayments on some short-term products.

Zhongrong is a company investing in real estate, stocks, and bond products and is one of the largest companies in the industry with assets totaling approximately $2.9 trillion (about 3,880 trillion won). According to data provider Use Trust, the company holds 270 high-yield products (about 39.5 billion yuan) maturing this year. The current payment delay crisis is reportedly related to the liquidity crisis of Zhongzhi Group, the company's second-largest shareholder and asset management company.

The authorities have reportedly formed a task force (TF) to assess the impact of Zhongzhi Group, which manages assets worth $138 billion. Currently, rumors are spreading that major trust companies such as Zhongxin, Zhongsheng, Wuguang Trust, and Guangda Trust have been facing difficulties in fund management since the end of last year, in addition to Zhongrong.

Sureyang, a Goldman Sachs analyst, forecasted, "Considering recent net asset values and repayment conditions, the growth of trust products will further slow down," adding, "Stricter real estate financing conditions could also affect bank profits and balance sheets."

This content was produced with the assistance of AI translation services.