Shanghai Man Dubbed ‘Steel-Trading King’ Has Shareholding Frozen
The company didn’t give details of why the 29.2 percent stake held by Shanghai Xinri Equity Investment Co. was frozen in a Jan. 30 statement. The same court also froze the 31.1 percent stake in Shanghai Xinri Equity held by Xiao Jiashou due to a loan dispute with China Minsheng Banking Corp., the steel manufacturer said in a separate Jan. 30 statement.
Investors have been on alert for signs of credit stress in Chinese industries after the threatened default of a high-yield trust product last month underscored risks of soured debt. Xiao, who Xinri Hengli identified as its controlling shareholder, is known as Shanghai’s “steel-trading king” and chairs the Shanghai Songjiang Steel Market, one of the biggest of its kind in China, the official Xinhua News Agency reported today.
Ningxia Xinri Hengli slumped 8.1 percent to 6.55 yuan in Shanghai, a two month low, as shares resumed trading today after the Chinese New Year Holidays. Calls to Ningxia Xinri Hengli’s board secretary office in Yinchuan city, Ningxia province and Shanghai Xinri Equity’s general line weren’t answered.
The finances of steel traders has previously attracted scrutiny. The People’s Bank of China has been probing a loophole that let executives at steel traders and other companies manipulate credit-card rules to bridge liquidity shortages, three people familiar with the matter said last month.
The possible default of a 3 billion-yuan ($495 million) trust product issued by China Credit Trust Co. and distributed by Industrial & Commercial Bank of China Ltd. also prompted concerns in January of financial fragility in the world’s second-biggest economy. The product was created to provide financing for a coal miner that collapsed in 2012, putting in question if investors would be able to recoup their money.
China Credit Trust began repaying principal in the product before its maturity at the end of January after reaching an agreement to bailout investors.
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