Shenzhen-based Foresea Life Insurance is being quizzed by regulators amid suggestions it could be preparing for a hostile takeover of Gree Electric Appliances.
The Shenzhen Stock Exchange has forced Foresea to respond to a public disclosure letter following a sharp rise in its purchases of Gree shares last month.
Foresea's holdings of Gree shares jumped from 0.99 to 4.13-percent in just over 2-weeks last month, making the insurer the 3rd largest shareholder of the Chinese air-conditioner giant.
Investors in China are normally only obliged to issue public disclosures if they've purchased more than 5-percent of a company.
Friday's disclosure demand was followed the next day by the head of the China Securities Regulatory Commission telling a meeting of the Asset Management Association of China that the country's capital market has been witnessing 'challenges' to China's financial regulations.
Liu Shiyu is suggesting asset managers have been using illegal funds to back leveraged buy-outs of Chinese companies.
For more on this we're joined on the line by Mike Bastin, Director of the China Business Center at Southampton Solent University in London.
