CCP Government Requires Banks and Enterprises to Review their Financial Risks Related to Fosun Group

According to foreign media reports on September 13th, people familiar with the matter stated that the CCP’s banking and insurance regulatory commission (BIRC) and state-owned assets supervision and administration commission (SASAC) required the largest banks and state-owned enterprises nationwide to conduct a financial risk review of Fosun.Last month, Moody’s Investors Service downgraded Fosun International. Its guaranteed dollar bonds have been among the worst-performing bonds in Communist China over the last three months, and they could see their worst drop since June. Its Hong Kong share prices fell 4.1%, nearly reaching their lowest level since 2013.

Various issues arose as a result of chairman of the board Guo Guangchang’s massive selling and cashing out of Fosun’s equities. The company’s debt ratio reached 74.8%, and its onshore entity revealed that all holders of a $2 billion bond demanded an early redemption.The SASAC’s Beijing branch asked local state-owned firms to disclose information on their ties to the Fosun group, such as stock holdings, debt lending, and guarantees, claiming that the requests were not intended to limit state-owned enterprises’ activities with Fosun.Despite the anticipated reviews of Fosun, commentators said the CCP government expected no changes in the company’s funding, including existing debts. Given that the CCP’s bagman enterprises simply shifted money from left to right, the emergence and fall of a given enterprise indicated the success or failure of the kleptocratic family behind it in political infighting. Guo Guangchang was merely a pawn, and his complacent performance in every situation would result in a disastrous finish.