Is Xinqi Asset another Ezubao?
Firm defaults on 1.9 billion yuan of wealth management products
An asset management company backed by property projects has defaulted on wealth management products worth 1.9 billion yuan (HK$2.27 billion), affecting more than 5,000 retail investors across mainland China and triggering more concerns about its property and financial markets.
Xinqi Asset held a meeting to discuss solutions with its investors in Shanghai on Wednesday, sources said. Retail investors have been unable to redeem their investments and earnings since Sunday.
A final solution has not been confirmed. It remains unknown whether other assets managed by Xinqi are safe. An earlier company statement said assets under management stood at around 4 billion yuan. Shanghai police have been taking complaints from investors and looking into the matter.
More defaults and scandals have been exposed in the mainland’s thriving wealth management business in recent months as the economy slows down, revealing scams in the innovative and less regulated sector. Late last year, the mainland’s largest peer to peer lending company, Ezubao, defaulted on HK$59 billion owed to more than 900,000 investors across the mainland. Xinhua said 95 per cent of the projects on the platform were fake.
Xinqi Asset sold wealth management products to individual investors, with the investments put into commercial and residential development in second-tier cities including such as Xian and Zhengzhou, and promised annual interest rates as high as 15.6 per cent, according to its official website and documents about its products.
Worse still, there is no specific regulator overseeing these companies
The wealth management products issued by Xinqi Asset were used to finance big property developers.
