(Yicai) Jan. 22 -- Twenty-six listed Chinese businesses have had trouble redeeming the wealth management products of five trust companies since last year, with the total amount involved nearing CNY2 billion (USD278 million).

All of the WMPs not repaid on time were sold by Guotong Trust, China Foreign Economy and Trade Trust, Zhongrong International Trust, Minmetals International Trust, and Yunnan International Trust, Yicai found.

The products offered annual yields of between 5.6 percent and 7.2 percent, higher than those for deposits and financial products at banks and other low-risk WMPs issued in the same period.

WMPs are investments that offer fixed returns above the regulated interest rates on deposit accounts. They are often used in sectors where bank credit is restricted, such as real estate.

Since last year, publicly listed companies have often been unable to redeem trust products, an industry insider said, adding that the problem is related to frequent defaults in the real property sector. The trust industry will be under great pressure this year as well, the person added.

The 52 trusts that released their 2023 annual reports had a combined net profit of CNY37.1 billion (USD5.16 billion), down 14 percent from the year before. Less than half posted earnings growth.

One of the businesses unable to recover its investment entirely is Innuovo Technology. The magnetic devices maker said on Jan. 19 that it had invested CNY120 million (USD16.7 million) in a WMP a year ago, but could only redeem CNY4.4 million (USD613,000) of that, and added that it was not confident of getting back the rest.

Innuovo Technology’s shares [SHE: 000795] slid 7.4 percent to CNY5 (70 US cents) apiece in Shenzhen today.

The Guotong Trust product that Innuovo bought invested in Hangzhou Yuyao Private Equity Fund Management. Yang Zebin, a major shareholder of Yuyao, has been the subject of an investigation by the public security authorities since last November.

Yuyao’s situation also affected Hengdian Group DMEGC Magnetics. DMEGC said last November that it put CNY300 million (USD41.7 million) in a Yuyao product, but only got back CNY13.8 million (USD1.9 million). It is possible that the rest will not be repaid on time or in full, the firm added.

Editor: Futura Costaglione