China's Dalian Wanda Group denies 'rumors' of bond sales

Shares of AMC Theatres and Legendary Pictures owner Dalian Wanda Group's publicly traded film company, Wanda Film Holding Co., plunged almost 10 percent Wednesday before trading was suspended after the Chinese government, which has cracked down on foreign investment in recent months, chose to take a closer look at the financing arrangements of some of its biggest global dealmakers.

Chinese banks have been required by the China Banking Regulatory Commission to report their exposure to debt related to Wanda, Fosun, Anbang Insurance Group Co. and HNA Group, the most prolific Chinese acquires globally during the past couple of years. The fifth company on the list is Rossoneri Sports Investment Management Changxing, which made headlines with its acquisition this year of Italian soccer powerhouse AC Milan. Certain China commercial banks are said to be dumping its bonds, according to reports.

It is not clear whether bank traders sold off their Wanda bonds on speculation that the company faces incoming "political risks", as suggested by some online rumours. 002739.SZ fell 10 percent, before they were suspended from trading in Shenzhen. "We hereby state that all operations are fine, and we sincerely hope that people will not trust or circulate rumors.", Wanda said in an unsigned statement. For example, Wanda Properties International's notes due in 2024 plummeted as much 10.7 cents on the dollar.

HNA Group, the sprawling aviation-to-financial services conglomerate, has announced more than $50 billion in deals since 2015, including stakes in Deutsche Bank and Hilton Worldwide Hotels Inc.

The Chinese conglomerate, which also owns the Club Med holiday chain among many other businesses, saw its shares fall by 9.6 per cent during the afternoon session of trading on the Hong Kong stock exchange. "Even if it is just a rumor, investors will choose to sell off first", Pang added.

The lending crackdown by the CBRC is the latest round in a financial discipline campaign ordered by China's top brass as concerns grow about the risk of an economic crisis triggered by risky borrowing. The turmoil comes days after news that the head of Anbang Insurance Group Co., an insurer with $294-billion (U.S.) of assets, was taken into custody.

Wang is China's second-richest man with a fortune of US$31.1 billion, according to the Bloomberg Billionaires Index.

At China's annual congress in March, Commerce Minister Zhong Shan blasted what he said were "blind and irrational investments" by Chinese companies overseas.

  • Zachary Reyes