China investment firm’s shares slump after bailout

Shares in scandal-hit China Huarong Asset Management have closed down by 50% after a state-backed bailout of almost $6.6bn.

 

The company’s shares resumed trading on Wednesday after a nine-month suspension on the Hong Kong Stock Exchange.

 

Huarong rocked Asian stock markets in August last year when it revealed a record loss of close to $16bn.

 

The firm’s former chairman Lai Xiaomin was executed last year after being found guilty of corruption.

 

Huarong, one of four state-owned distressed-debt managers, halted trading in its shares on 1 April last year.

 

The move came after the firm missed a deadline at the end of March to file its earnings for 2020.

 

That sparked a rout in Huarong’s US dollar-denominated bonds that spread to the bonds of other Chinese companies.

 

In August, Huarong, which counts China’s finance ministry as its largest shareholder, announced a profit of $24.5m for the first half of 2021 and an almost $16bn loss for 2020.

 

The company had earlier in November said that it would receive a cash injection of $6.59bn from a group of state-backed investors as part of its rescue plan.

 

Huarong, which is majority-owned by China’s Ministry of Finance, was set up in 1999 to take bad debts off the country’s largest state-owned banks.

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