Banking regulator raises alarm on property developer Greentown

The China Banking Regulatory Commission issued a request earlier this week to Chinese trust companies, asking for details on loans made to Hong Kong-listed Greentown China Holdings (3900.HKG), the Wall Street Journal reported, citing sources at two trust companies. Greentown’s stock price dropped over 16% on Thursday in reaction to the reports, leading a broader decline among Chinese property developer share values. Trust companies in China are unique investment vehicles, capable of funneling funds from companies and wealthy individuals into a wide range of investments, but there have been questions as to their transparency and their ability to facilitate companies and banks to conceal bad loans from regulators. There has been no indication that regulatory scrutiny will be extended to other companies, but the news has increased concerns about the health and creditworthiness of China’s property sector.