China wealth firm Hywin vows to fix defaults as shares tank 59%
CHINESE wealth manager Hywin Wealth Management pledged to address delayed payments on some investment offerings it had distributed, after its US-listed shares sank almost 60 per cent amid investor concerns.
The firm, once China’s largest distributor of real estate wealth management products, has formed a special task force to come up with a treatment plan before end of the month, it said on Sunday (Dec 17). The economic downturn had led to delays in underlying projects of certain products, it said, without disclosing the amount involved.
The incident is another sign that China’s property crisis, which saw defaults by some of its largest developers including China Evergrande Group, is hurting the nation’s middle class families. Hywin worked with developers such as Evergrande and Sunac China Holdings, according to its listing prospectus.
Chatter on delayed payments on products distributed by Hywin surfaced last week, sinking the shares of its US-listed entity Hywin Holdings by 43 per cent on Wednesday. Hywin Holdings later acknowledged in a Thursday filing that redemption issues were reported on certain asset-backed products. Its shares had dropped 59 per cent as at Friday.
Asset managers of the products failed to get investors to agree to deferred redemption and clients were demanding repayment from the company instead, Hywin Holdings said, adding that it acted only as the distributor.
“Any failure to adequately deal with these redemption issues could materially and adversely affect our reputation, client relationship, business, financial condition and prospects,” the firm said in the filing.
Hywin Holdings began operations in late 2006 through Shanghai-based Hywin Wealth Management. The company has over the years provided asset allocation and wealth management services to more than 146,000 high-net-worth individuals and institutions, according to its website.
China’s wealthy investors were rocked last month by shadow banking giant Zhongzhi Enterprise Group, which warned of severe insolvency after one of its trust affiliates failed to make payments on high-yield products. A following criminal investigation into the firm, which pooled household savings to invest in areas including real estate, could potentially inflict tens of billions of US dollars in losses on investors. BLOOMBERG
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