Destabilizing speculation

Trust companies in the sights of auditors as the shadow banking system is targeted

China’s top auditor is carrying out a review of the 20 trillion yuan (HK$23.2 trillion) fiduciary sector, paving the way for a potential overhaul of a key shadow banking sector in which losses on home loans are rising.

In an unanticipated move, the National Audit Bureau – which previously conducted a review of banking exposures to Jack Ma Yun’s Ant Group – over the past month inspected the books of at least 20 trust companies, including the five main ones, to assess the risks they pose. to financial stability.

Companies are asked to report on their subprime loans to developers and any plans to get rid of them.

The audit office is expected to submit its findings to policy makers in Beijing, who could then decide on future sector reforms.

While it’s unclear what regulatory action the review will spur, the move illustrates how worried authorities are about contagion from the real estate sector destabilizing the financial sector.

Trust companies have this year defaulted on about 58 billion yuan of investment products tied to property developers, which were sold to wealthy Chinese, according to industry data tracker Use Trust.

Behind Jack Ma, its e-commerce giant Alibaba (9988) laid off 9,241 employees in the three months to June, according to the company’s latest filing. The Hangzhou-based company said it had just over 245,000 employees at the end of the last reporting quarter, shrinking during a period that marked its first-ever revenue contraction.

Alibaba also cut its workforce by 4,375 people in the first three months of the year, reflecting widespread moves by global tech companies to limit spending at a time of rising inflation, rising material costs and political tensions.

Meanwhile, the Cyberspace Administration of China revealed that it has taken several steps to clean up a number of accounts and websites that illegally promote cryptocurrency.

It closed 12,000 illegal accounts and cleaned up over 51,000 illegal posts on Weibo (9898), Baidu (9888) and other online platforms.

He also said he will continue to crack down on illegal financial activities related to cryptocurrency. In this regard, he reminded people not to participate in cryptocurrency trading and speculation.