Shares of Fosun, the private Chinese conglomerate parent company of Club Med, fell to their lowest level in nearly a decade on Wednesday after media reports of a review of its debts by regulators and despite the group’s denial.
The group’s main company, Fosun International Limited, fell as much as 9.6% in Hong Kong mid-trading to trade at HK$4.41, its lowest level since November 2012.
This plunge reflects the nervousness of investors after information from Bloomberg News. Citing unnamed sources, the agency reported on Tuesday that Chinese authorities, including the banking watchdog, have asked major banks and state-owned companies to take a close look at their financial exposure to Fosun.
Fosun’s chief financial officer, Alex Gong, said Tuesday evening that Bloomberg’s information was “completely false”.
“Neither the China Banking and Insurance Regulatory Commission (CBIRC) nor the Shanghai Banking and Insurance Regulatory Commission have asked commercial banks to inquire about Fosun’s financial exposure, nor have these institutions received no notice about it,” Gong told the Hong Kong daily South China Morning Post. Statements that were not enough to allay the fears of investors.
A prolific acquirer of global assets, Fosun has owned French brand Club Med since 2015. The group also owns a majority stake in fashion house Lanvin, and has a monopoly on the distribution of the coronavirus vaccine BioNTech in China.
The level of indebtedness of Chinese companies, particularly those in the real estate sector, is the subject of increasing attention.
Several construction giants, including Evergrande, defaulted on their debts and were forced into major restructuring.
According to Bloomberg, Fosun must repay about $8 billion in bonds through 2023.
Last month, Moody’s downgraded the group’s rating citing weak liquidity and a weakening portfolio amid asset sales.