In a new move to reduce financial risks in the market, the government-backed China Asset Management Association verbally informed private equity firms that it will not accept new applications to set up funds to invest in the real estate sector and that unresolved applications will be denied, says Bloomberg. The decision comes on top of other measures to restrict financing for PE, such as bank loans and trusts. Some of the largest real estate developers are suffering serious problems due to their high levels of indebtedness and are seeing a record increase in defaults in China's bond market. An emblematic case of the sector's situation is that of Evergrande China, the country's second largest and most indebted real estate developer, which is facing problems in meeting its financial obligations. Its credit quality has been downgraded by credit rating agencies in recent weeks and its share price has plummeted by more than 70% in the last year.