Hywin Wealth, a Shanghai-based wealth management company with ties to embattled property developer China Evergrande Group, said it would look into missed payments on its investment products, after talk of repayment difficulties sent shares of its Nasdaq-listed parent plunging to a third of its value over the past week.

Hywin Wealth, controlled by Nasdaq-listed Hywin Holdings, said in a statement on Sunday that its "projects were delayed due to a declining economy", and that it had established a special investigation committee to "proactively coordinate relevant parties in planning solutions".

A relatively small player in China's US$3 trillion shadow banking industry, Hywin Holdings had 8.5 billion yuan (US$1.2 billion) in assets under management as of June 2023, according to a filing with the US Securities and Exchange Commission.

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Founded in 2006, Hywin Wealth has over 2,500 employees and offers asset management and consulting services to over 146,000 high net worth individuals and institutions, according to the company's website.

Investors play cards in front of an electronic board showing stock information at a brokerage house in Shanghai. Photo: AFP alt=Investors play cards in front of an electronic board showing stock information at a brokerage house in Shanghai. Photo: AFP>

"In accordance with the most recent regulatory policy and industry guidance, Hywin Wealth has volunteered to withdraw and sort out our existing businesses," the company said in the December 17 statement. "We will inform everyone about relevant solutions by the end of the month, and we hope people will refrain from believing in and spreading rumours."

Hywin Wealth did not respond to the Post's request for comment.

Shen Meng, director at Beijing-based investment firm Chanson & Company, said Hywin Wealth showed how closely intertwined China's wealth management industry is with the stricken property sector.

"A potential default [by Hywin Wealth] will not have the same scope of influence as the other larger wealth management companies that have previously gone bust, such as Zhongzhi, but this goes to show the challenges that our country's economy is facing at the moment," said Shen.

Zhongzhi Enterprise Group, one of mainland China's largest shadow banks, warned investors last month about its inability to repay its debts, setting off alarm bells in the trust sector which invests a large portion of investors' money in real estate projects.