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Club Med owner Fosun, one of China’s largest private-sector conglomerates, saw billions wiped off its value on Wednesday as jittery investors reacted to a media report that the group was under regulatory scrutiny.
There has been growing concern about the debts of Chinese companies, particularly after a run of high-profile defaults in the property sector last year that rippled through the wider economy.
Bloomberg News on Tuesday cited unnamed sources as saying that regulators, including China’s banking watchdog and the local commission overseeing state investments, have told large lenders and state-owned enterprises to closely examine their exposure to Fosun.
Shares in Fosun International Limited, the conglomerate’s flagship company, slid as much as 9.6 per cent in Hong Kong on Wednesday.
They later pared some of those losses, ending the day down 6.6 per cent at HK$4.56, the lowest level since late 2012.
Fosun’s Chief Financial Officer Alex Gong rejected the Bloomberg report as completely false.
Neither the China Banking and Insurance Regulatory Commission (CBIRC) nor the Shanghai Banking and Insurance Regulatory Commission have asked commercial banks to find out about Fosun’s financial exposure, and those institutions have not received any notice of this, Gong told the South China Morning Post.
The public had a one-sided interpretation of Fosun’s recent reductions in shareholdings and divestments and failed to see that they were part of a long-term financial strategy, the Shanghai-based company added in a statement.
Co-founded by tycoon Guo Guangchang in 1992 during the heady days of China’s initial reform and opening period, Fosun started off in pharmaceuticals and real estate but has since built a sprawling business empire that includes tourism and finance.
A prolific buyer of global assets, Fosun owns French brand Club Med and has a controlling stake in the fashion house Lanvin.
It owns English Premier League football club Wolverhampton Wanderers and has a major stake in Canadian circus producer Cirque du Soleil.
In 2020, Fosun struck a deal with Germany’s BioNTech to manufacture its coronavirus vaccine in China and later became its exclusive distributor to the Greater China region.
