China faces fears of ‘Lehman moment’ as big investment firm misses payments

New Delhi [India], August 19 (ANI): The Wall Street Journal on Saturday reported that investors fearing a 'Lehman moment' in China are threatening the solvency of the country's financial system.
The American business and economic-focused daily said that signs of financial stress at a large asset manager in China are making investors nervous about contagion from the country's slumping property sector, rekindling a debate over whether a “Lehman moment” could occur in the world's second-largest economy.
According to CNN Business- at least three Chinese companies had in separate stock exchange filings in recent weeks stated that the Chinese firm Zhongrong Trust had failed to pay the interest and principal on several investment products with the missing scale of payments exceeding 110 million yuan ($15 million).
CNN said videos uploaded on social media app Douyin and WeChat showed demonstrators outside Zhongrong’s office and held protests demanding payments related to investment products issued by the company, which is one of thousands of wealth management firms in China.
The term 'Lehman moment' refers to the catastrophic event in September 2008 in which Lehman Brothers, then the eighth-largest investment bank in the United States filed for bankruptcy, triggering a domino effect that sent shockwaves throughout the global financial system, resulting in the worst economic crisis since the Great Depression.
China's financial system, one of the world's largest, has been under scrutiny recently due to a series of challenges, including a property market slowdown, regulatory crackdowns on tech giants, and concerns about rising debt levels.
The August 18 Wall Street Journal report highlights that these factors have raised concerns among investors that a similar systemic crisis might be looming.
Investors and financial experts are closely monitoring the situation, as China's financial stability plays a vital role in the global economy.
According to analysts, the potential implications of a 'Lehman moment' in China could be far-reaching, affecting international trade, investments and economic growth.
CNN Business report said that Zhongrong had on Monday issued a statement saying “criminals” had sent false notices to customers about the cancellation of investment products. It warned investors to be vigilant of fraud, but has not commented on the issue of missed payments to investors.
Zhongrong is linked to the Zhongzhi Group, one of China’s largest private conglomerates with operations in financial services, mining and electric vehicles.(ANI)