In a post by Sigma360, the firm outlined how FinTechs can avoid a potential ‘Evergrande’, referring to the fall of Chinese property giant China Evergrade.
The importance of staying ahead of the curve when it comes to financial risks is imperative, as demonstrated by incidents involving Wirecard, Adani Group, and others. With the world generating data at an unprecedented rate and the advancements in technology, it’s now possible to discern risks not just at the direct customer level but also the layers beyond. This includes understanding a customer’s associates and connections, an area that frequently remains under the radar in standard evaluation practices.
A notable case that underscores this point is that of the beleaguered Chinese property giant, China Evergrande. The company has been in the limelight for its issues for a while, with significant events tracked by Sigma360 since 2015. Recent revelations indicate a deepening crisis for Evergrande, as Hui Ka Yan, its billionaire founder and chairman, is reportedly under investigation for alleged illegal activities. Considering real estate accounts for roughly 25% of China’s economy, and Evergrande’s dominance in the sector, this development is undoubtedly alarming.
Such news not only has repercussions for Evergrande and Hui Ka Yan, but it also leads to questions about the collateral damage it might cause. Who else could be affected? Are there any other organisations or individuals linked or associated with Evergrande that might be vulnerable?
Digging deeper, several entities emerge that could potentially be affected by the unfolding Evergrande situation. These connections vary, from shareholdings to past business dealings, even to other companies potentially in the same predicament. Key associations include:
- Bank of Jinzhou, China Bohai Bank, Shenjing Bank Co., Ltd., and China Vanke Company – all have major shareholding by Hui Ka Yan.
- Xia Haijun and Pan Darong, both former top executives at Evergrande, reportedly face legal scrutiny.
- Firms like Evergrande Wealth, Country Garden, and China Oceanwide are also noteworthy as they share certain characteristics with Evergrande.
An understanding of these relationships can provide analysts with insights into the risk profile of Evergrande or transactions related to its executives. This connection-centric view also enables more refined risk assessments when dealing with entities like Xia Haijun or China Oceanwide.
The Evergrande case, though intricate and high-profile, is not unique. Similar instances, where the actions of one entity or individual can influence several others, have and will continue to happen. To stay one step ahead, teams need robust tools to assess both direct and indirect risks. Sigma360, in collaboration with Fitch Ratings and other major entities since 2020, has devised a solution to this challenge. Their fully connected risk decisioning platform aims to provide a holistic view, ensuring users are equipped to anticipate potential risks in their business dealings. This platform is ready-to-use, and its capabilities can be augmented by integrating external data with internal institutional data.
Read the full post here.
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