Wang Jing and Xinwei expelled from Shanghai Stock Exchange

Chinese magnate Wang Jing’s participation in the Chinese stock exchange has come to an end. His company, Beijing Xinwei Technology Group Co., also known as Xinwei Group, was delisted from the stock market, together with the businessman who headed it.

Wang Jin, a previously unknown tycoon, became a household name in Nicaragua in 2013, when Daniel Ortega announced his intention of awarding Wang a concession to construct an inter-oceanic canal across Nicaragua. The estimated initial cost of the project was 40 billion dollars, later raised to 50 billion. In his initial presentation, Ortega referred to the magnate as “the phantom”, a reference that the Asian magnate later made real, by subsequently disappearing, after failing to keep any of his promises.

The Epoch Times, a New York-based international media company focusing on China, chronicled the magnate’s many dealings, and the sanctions imposed when his bubble burst. “The sanctions included the delisting of the company’s shares and disallowing Wang to serve in any managerial capacity of listed companies for 10 years,” they reported.

Following the sanctions, share prices of the Xinwei Group plummeted 2.3 billion dollars into the red, thus creating “significant financial turmoil for over 100,000 of its shareholders,” stated the Epoch Times article.

It wasn’t the first time that Wang Jing has suffered multi-billion-dollar losses on the Stock Exchange. In October 2015, following a general plunge in the Asian stock market, the magnate lost more than 9.1 billion dollars – 89.2% of his reported 10.2 billion dollar holdings.

Continuing his erratic stock behavior, in June 2017, the company delivered dividends of 0.009 Chinese “peoples’ renminbis” (just over a tenth of a US cent).

At the beginning of the second semester of 2019, “Xinwei Group’s trading was overturned after more than 900 days of suspension. After falling for 36 consecutive days, the company set a record for consecutive A-share losses, with market value evaporating nearly $29.5 billion,” reporter Julia Ye noted in the Epoch Times. This affected more than 150,000 shareholders.

According to a report from the Shanghai Stock Exchange that Confidencial was given access to, that year, Xinwei suffered the fourth largest losses of any company listed on that exchange. At the close of 2018, its shares were listed at 14.59 renminbi (approximately US $2.18). Exactly one year later, the share price was 3.06 renminbi (US .45 cents), representing a loss of 79.03% of their value. This led the Shanghai Exchange to include the company on a list of those at risk of being delisted in 2019, as in fact later occurred.

In March, 2020, when the Chinese magnate had long disappeared from view in Nicaragua, the markets echoed yet another disaster in Wang Jing’s business dealings. The value of his stock fell yet another 45.8%, leaving his nominal fortune still smaller.

Mysterious dealings and lack of transparency

Press reports track how Wang Jing took advantage of the initial expectations raised by the inter-oceanic canal project. While in Nicaragua, the rural residents whose lands were threatened organized and carried out a hundred different protest marches against the project, Wang Jing was using the project “to attract investors and shell listings.” In September 2013, he raised 4.2 billion dollars, leveraging that over the next two years to increase the market value of his company to over US $31 billion. That year, his company was included in the exclusive SSE 50 index.

That development greatly benefited Wang. According to Forbes China, he owned over a billion shares of Xinwei Group stock, which came to be valued at 6.6 billion dollars in 2014. This made him one of China’s top billionaires. The Epoch Times notes, “The Xinwei Group enabled three additional Chinese investors to become billionaires.”

“The Xinwei Group’s initial appeal would eventually evaporate due to its weak foundation, mysterious dealings, and lack of transparency,” the article continues, thus summarizing some of the reasons that led to the company’s delisting, after Wang took over the presidency of the Xinwei Group. 

“Wang claimed the company had turned a loss into an $88.4 million profit due to a large order of $466 million from Cambodia. But an investigation report by NetEase Finance in 2016 (…) said Wang’s report was fraudulent. The profits he reported were based on an illusion created by Xinwei Group and its subsidiary, Cambodia Xinwei,” the article reports.

Data from the investigation indicated that the Cambodia Xinwei subsidiary agreed to order US $466 million dollars in products from the parent Xinwei Group.  Wang’s company then used that order to obtain a loan of $466 million from the China Development Bank. This same money was then used by the Cambodian subsidiary to finance its order from the Xinwei Group. This circular mechanism was similar to one the company used to expand its operations into Ukraine, Tanzania, Nicaragua and other countries.

With the fame and resources he acquired, Wang embarked on other international megaprojects. These – like the Nicaraguan canal – never materialized. Among them was Beijing Skyrizon Aviation, a company that was later sanctioned by the United States when it attempted to acquire a Ukrainian aviation engine company. He also got involved in a project to build a deep-water port in Crimea.

Other “projects” of the tycoon included the acquisition of an Israeli satellite company, and getting involved in international security operations. Finally, he attempted to create a “network of air and space information” that would involve over thirty satellites to form a global communications system. “These hot projects and dreams made media and investors excited and helped the company to obtain new loans to pay back the old debt,” the Epoch Times summarized.

Meanwhile, in Nicaragua, hopes of a canal are long-faded. However, Law 840, the Canal Law, is still on the books, and calls for it to be repealed have been consistently ignored. Among other things, this law granted Wang Jing exclusive rights to build and operate the canal, potentially for over 100 years. Not only that, it authorizes the canal project to expropriate any lands along the canal’s path. Wang Jing’s phantom fortune may have imploded in Shanghai, but his shadow remains in Ortega’s Nicaragua.

This article was originally published in Spanish in Confidencial and translated by Havana Times