A unit of the debt-ridden property developer China Evergrande Group is under investigation by the Shenzhen government, the city’s financial regulator told investors on Monday, reports Reuters. The move is the first sign of an official inquiry into the wealth management crisis at the real estate giant.
Evergrande, headquartered in Shenzhen, owes $305 billion and has run short of cash, triggering concerns its problems could ripple through China’s financial system. Earlier this month the company’s wealth arm missed a payment on wealth management products (WMPs), leading to protests by investors who fear they will not get their money back.
In a letter to investors seen by Reuters, the Shenzhen Financial Regulatory Bureau said “relevant departments of the Shenzhen government have gathered public opinions about Evergrande Wealth and are launching a thorough investigation into related issues of the company.”