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China retaliates against Dalian Wanda for overseas investments
Six deals said to have violated regulations on foreign spending
There are signs that the Chinese real estate spree in New York City could be over.
Chinese regulators plan to cut off funding on six investments made by Dalian Wanda Group, one of five big-ticket spenders that have come under increased scrutiny as the government clamps down on overseas investments.
The six deals were found to have violated regulatory restrictions on overseas investments, though the specific breaches were not immediately clear, Bloomberg reported. The moves by regulators include prohibiting banks from providing the company with financial support on the deals and banning Wanda from selling the assets to Chinese companies.
Wanda Group founder and billionaire Wang Jianlin, China’s largest real estate developer and second-wealthiest man, has announced more than $20 billion worth of deals since the beginning of 2016. The move by regulators represents an escalation in its crackdown on overseas spending.
“To investors, political risk is now the biggest concern when investing in Chinese companies,” said Castor Pang, head of research at the investment bank and advisory firm Core-Pacific Yamaichi HK. “Not only Wanda, every Chinese company won’t find it easy anymore to acquire assets overseas. Stabilizing the yuan is the top priority for Beijing now.”
Last month it was reported that Dalian Wanda Group had come under increased scrutiny from regulators along with Anbang Insurance Group, HNA Group, Fosun International and Rossoneri Sports Investment Management.
Four of Wanda’s six deals have already been completed, including the $9.3 billion sale of 89 hotel and tourism assets to Sunac China Holdings. [Bloomberg] – Rich Bockmann