Embattled China Fortune Land Losses $313M Entrusted To Wealth Manager
A Chinese property developer that was once one of the country's largest says it has lost contact with a wealth manager that it gave $313 million. It's just the latest blow to China's embattled real estate sector, Diksha Madhok reported for CNN Business.
Photo Insert: China Fortune Land Development (CFLD) won the bid for the land rearrangement integrated service project of Weiyuan Island in Guangdong province in 2020.
China Fortune Land Development said in a stock exchange filing on Thursday, that it entrusted the money to China Create Capital, a company registered in the British Virgin Islands, to invest in fixed-income financial products.
It said it expected an annual return of 7% to 10% on its investment. The Chinese developer says now, though, that it hasn't been able to contact China Create Capital.
Fortune Land said that it doesn't yet know how the missing funds will affect its profits. It added that it will "actively cooperate" with a Chinese police investigation "to protect the company and shareholders' interests."
Like other Chinese real estate firms, Fortune Land has had a terrible year. Shares in the Shanghai-listed company have fallen more than 70% since the start of 2021.
Many major players have struggled since the Chinese government began trying to cool the real estate market, raising the specter of wider problems across a sector that accounts for as much as 30% of GDP, including related industries.
Evergrande — one of the country's largest and most indebted developers — defaulted on its debt earlier this month. Analysts have long been concerned that its collapse could trigger wider risks for China's property market, hurting homeowners and the broader financial system.
China is now scrambling to contain the fallout, with the central bank announcing this month that it would pump $188 billion into the economy.