Is China done with its market crackdown? Ask Fosun.

Global investors are wondering these days if Beijing has decided to ease a year-long regulatory campaign that has cost them more than $1 trillion in losses. After all, China accounts for about a third of the emerging markets benchmark. It is simply too big to be ignored.

Without a clear policy statement on offer, asset managers have resorted to reading tea leaves. For example, a deal that would allow the US securities regulator to review the audit documents of New York-listed Chinese companies in Hong Kong could be a sign that China is once again eager to attract foreign investment. Beijing may also try to appease capital markets by reviving the listings of Didi Global Inc. and Alibaba Group Holding Ltd.’s fintech subsidiary Ant Group Co.

So far, there have been mixed signals. Take the housing market, where local governments have been circling. Last Thursday, industrial hubs such as Qingdao and Suzhou lifted second-hand and non-resident home buying restrictions, respectively, only to reverse the following morning. These setbacks have led investors to conclude that President Xi Jinping’s mantra that housing is for living, not speculating, remains firmly in place. As such, the August mini-rally in home developers’ high-yield dollar bonds quickly ran out of steam. Adding to the mixed bag is Shanghai-based private equity giant Fosun International Ltd., whose empire includes an English Premier League soccer club, Portugal’s largest bank. and French tourism group Club Med. Its stocks and bonds have seen heavy sell-offs recently as global ratings agencies downgraded the company, citing refinancing risks.

Those risks reflect investors’ concerns about meddling government authorities. Last week, the inner secretary of the Fosun Communist Party visited the Beijing branch of Sasac, the State-owned Assets Supervision and Administration Commission of the State Council, the company said in a statement.

The powerful agency has seen selling pressure on some of its portfolio companies of late. In early September, a subsidiary of Fosun pledged a 7.9% stake in Beijing Sanyuan Foods Co. to a brokerage. Sanyuan’s largest shareholder is a state-owned company directly supervised by Beijing Sasac.

Fosun said that Beijing Sasac conducted a routine information-gathering survey with the company and that the agency has issued such notices to other companies before. The two sides had in-depth exchanges on the long-term cooperation between Fosun and Beijing’s state-owned enterprises.

In another era, investors might have written off a visit from Fosun’s Sasac. But after a harsh crackdown, in which little-known government agencies came out of nowhere to erase billions of dollars from companies’ market values, think about the aggressive posture of the cybersecurity watchdog that ultimately led to ride-sharing giant Didi delisting in New York: Merchants are understandably skittish.

Using loan-to-value ratio as a measure of financial security, at 39%, Fosun’s balance sheet is healthy for an investment holding company. However, with not enough cash on hand and access to the dollar bond market closed, Fosun must rely on refinancing bank loans and quick asset sales to meet its short-term obligations. About 53% of its debt will come due in a year, according to S&P Global Ratings. In other words, Fosun’s ability to quickly dispose of its investments is crucial.

With just 117 billion yuan ($17 billion) in debt, Fosun doesn’t come close in scale to China’s indebted developers. Still, the company matters because it is a key barometer in the high-yield corporate bond market. Last year, when real estate developers tanked (about a third of the top 100 builders defaulted or took out loan extensions), Fosun became the natural destination where investors could park their cash. It has scale, liquidity and, until recently, a decent credit rating. Fosun has about $4 billion of dollar bonds outstanding, with its smallest issue at a respectable $450 million. It used to be a BB rated company.

Now that safe haven may not be so safe. And the market for high-yield dollar corporate bonds has cooled a bit more.

When a company approaches difficulty, credit analysts can always point fingers at one metric or another, saying its cash flow management could be better. However, even the best private companies can fail if the government is too jealous or nosy.

In the capital markets, the Chinese government does not have the best reputation at the moment. If Beijing still wants foreign capital, it should tell its various agencies to stay out of it and keep quiet. Their spontaneous visits to businesses scare off investors.

More from Bloomberg’s opinion:

• Private equity giants are having cash flow problems: Shuli Ren

• Committing to Chinese stock prices is a win for the US: Editorial

• Xi Jinping is sending mixed messages to investors: Shuli Ren

This column does not necessarily reflect the opinion of the editorial board or of Bloomberg LP and its owners.

Shuli Ren is a columnist for Bloomberg Opinion covering Asian markets. A former investment banker, she was a markets reporter for Barron’s. She is a CFA charter holder.

More stories like this are available at bloomberg.com/opinion

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