Chinese Asset Managers' Liquidity Crisis Sparks Global Panic

<p>&nbsp;Chinese investment manager, Zhongzhi Enterprise Group announced that it will carry out debt restructuring following the liquidity crisis it is facing.</p><p><br /></p><p>Zhongzhi, exposed to a cash crunch in China's real estate sector, said it had stopped paying investors in all its investment products.</p><p><br /></p><p>This follows reports earlier in the week about its failure to repay investment products to two listed companies, which offer savers and companies higher returns than traditional banks.</p><p><br /></p><p><br /></p><p>In the wake of that, it has hired one of the Big Four accounting firms to conduct a comprehensive audit of the company, and is looking for a strategic investor, its management told investors in a meeting Wednesday.</p><p><br /></p><p>Its financial woes are the latest challenge for China's government, which continues to struggle to contain a real estate crisis and revive the world's second-largest economy.</p><p><br /></p><p>Asset managers like Zhongzhi raise hundreds of billions of dollars by selling 'shadow banking'-related investment products and high returns through trust and wealth management units, and have strong relationships with banks and other financial firms.</p>