The city’s financial regulator told the investors that the Shenzhen government is investigating a unit of Chinese developer Evergrande. This is a first sign of an official inquiry into the wealth management crisis at the real estate giant. Evergrande is the world’s most indebted property developer. Its headquarters is in Shenzhen. They owe $305 billion and has problems that could ripple through China’s financial system.
The company’s wealth arm earlier this month missed a payment on wealth management products (WMPs). This has led to protests by investors. In a letter to investors, the Shenzhen Financial Regulatory Bureau said that the relevant departments of the Shenzhen government have gathered public opinions about Evergrande Wealth. And then, they are launching a thorough investigation into related issues of the company. China Evergrande issued high-yielding WMPs to investors. More than 80,000 people including Evergrande employees, bought WMPs through Evergrande.