A government crackdown on financial risks and money laundering ahead of China’s 19th Party Congress has led to heightened scrutiny on several of China’s large overseas asset buyers, with billionaire Wang Jianlin’s Wanda Group in the mix.
The China Banking Regulatory Commission (CBRC) has “instructed several local banks to conduct financial reviews on selected companies,” according to the South China Morning Post. Banks were required to check their “credit exposure to selected companies, and prepare a risk analysis,” which triggered a sell-off of their corporate bond holdings.
“Wanda Properties International Co.’s 2024 notes plunged as much as 10.7 cents on the dollar to 101 cents in morning trading in Hong Kong, the biggest drop on record,” according to Bloomberg-compiled data.
HNA Group’s 2019 dollar-denominated bond fell 2.327 points to $97.4; Fosun International’s 2023 bond fell 5.6 points to $98.2, according to data provided by BondEvalue.
Wanda Group, in a statement, claims that the rumors are false and the company is ‘sound’.
The major component of “doing business in China is the company’s political stance… Even [if] it is just a rumor, investors will choose to sell off first,” said the head of research at Core-Pacific Yamaichi HK.
Warning companies can transmit risks to upstream and downstream industries and banks, the CBRC added that it will closely track risks when problems occur in big companies. More to the point, the CBRC ordered checks on HNA, Dalian Wanda, Fosun and other prominent foreign buyers and asked banks in mid-June to conduct risk analysis and check loans made to these companies.