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Chinese Executive Stabbed After Losing Client’s Money

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Chinese Executive Stabbed After Losing Client’s Money
stabbing3 Courtesy of Getty Images

Chief executive of Global Wealth Investment fell into a coma following a violent encounter with a livid investor. Wang Jie was stabbed Wednesday after losing 300,000 yuan ($47,000) of his client’s money to failing Chinese equity markets.

According to an anonymous witness the assailant sat next Wang Jie and “pretended nothing was wrong.” In the blink of an eye, the investor pulled out a weapon and carved a trench, nearly 6 inches long, into Wang Jie’s shoulder.

After the stabbing, the assailant nonchalantly waited for authorities.

The incident, while disgusting in nature, is the manifestation of the public’s frustrations with high risk and volatility in the markets.

China’s stock market increased by 70% this year through June but the high was short-lived. Stocks would tumble a third of the way down in subsequent months.

In the People’s Republic, panic-stricken authorities have flooded hundreds of billions of dollars into the market to keep it afloat but to no avail.

Guarantor Not Guaranteed

china-stock-market-selloff (Courtesy of Reuters/Aly Song)

Global Wealth loaned more than 700 million yuan ($110.4 million) in assets. Investors who chose to use Global Wealth as their intermediary were promised the venture would be risk-free. The investments were supposed to be insured by Hebei Financing Investment Guarantee Group.

Despite being one of China’s largest investment guarantors, Hebei reneged on its commitment to investors.

“Hebei Financing defaulted on us, and we defaulted on our clients,” said the representative of Global Wealth.

Chinese financial news outlet Caixin revealed that Hebei is currently dealing with liabilities of nearly 50 billion yuan. Hebei ended 2013 with only 10.7 billion yuan in assets.

Prior to the plummeting stock market, Global Wealth enjoyed a pool of 200 employees. Today, all but 15 employees have been relieved of duty.

Global Wealth has since filed for bankruptcy.

Loan-guarantee firms are being used to facilitate the Chinese government’s economic-revival plan. The plan relies on money from lenders to stimulate the growth of the country’s small-business sector.

Zhou Dewen, president of a business development association reminds us that China’s loan-guarantee industry “still lacks effective risk control.”

 

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