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Asset manager Huarong plunges 50pc as trading resumes

BEIJING (AFP) – Shares in China’s state-owned debt collector Huarong Asset Management plummeted 50 per cent on Wednesday as trading resumed in Hong Kong after a USD6.6 billion state-orchestrated bailout of the embattled company.

The company’s Hong Kong-traded shares were suspended in April last year after it delayed its annual report, spooking Asian markets.

When Huarong published its results in August, it revealed a record USD15.9 billion loss for 2020 and outlined a rescue plan.

On Wednesday, its share price slid from HKD1.02 (USD0.13) to HKD0.51 by day-end, closing 50 per cent down.

The plunge follows a filing late on Tuesday in which Huarong said it would return to its core business, adjust its structure, cut capital consumption and boost returns.

The China Huarong Asset Management Co headquarters in Beijing. PHOTO: BLOOMBERG

Business operations of the group are continuing as usual, it added.

Huarong has also completed a recapitalisation of HKD42 billion from a group of state-backed investors, and started disposals of assets.

“The valuation achieved by the disposals will determine its capital buffer… and will be key in absorbing losses,” said Fitch Ratings in a report last month.

Fitch added that “near-term asset risk at its core business and leverage will stay elevated due to its weak asset quality and business nature”.

Huarong’s shares plummet comes as troubled real estate giant Evergrande was labelled as being in default by a ratings firm last month after failing to make repayments on time.

Observers said a state-backed lifeline is not likely for the developer as Beijing looks to rein in excessive debt in the sector.

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