Table of Contents
What happened to Huarong Asset Management?
China’s top manager of distressed assets, China Huarong Asset Management Co., confirmed it made a net loss of roughly $16 billion last year, and warned investors that it fell short of regulatory requirements on financial strength. The publication of the 2020 results is a key step in the rehabilitation of Huarong.
What happened to China Huarong?
SHANGHAI — China Huarong Asset Management is set to receive a capital injection from a group of companies led by Citic Group, the state-owned bad-debt buyer said Wednesday, as it announced an estimated 102.9 billion yuan ($15.9 billion) net loss for 2020.
What went wrong with Huarong?
Huarong, a financial conglomerate with debts of USD 22 billion, in April failed to publish its financial records for 2020, reviving fears about possible systemic risks lurking in the world’s largest financial system. But Huarong did throw a stark light on the work they have to do to impose market discipline.
What is Huarong crisis?
Huarong, simply put, has been in full crisis mode ever since it delayed its 2020 earnings results, eroding investor confidence. Executives have come to expect to be summoned by government authorities at a moment’s notice whenever market sentiment sours and the price of Huarong debt sinks anew.
Will China bail out?
It’s a sign that China might not bail out Evergrande, the country’s second-biggest property developer and the world’s most indebted company, for now. Multiple sources told Reuters that Beijing’s direct intervention through a bailout is unlikely.
Why was Huarong a troubled institution?
Huarong’s troubles began in 2018, when company chairman Lài Xiǎomín 赖小民 was arrested on corruption charges. Under Lai, Huarong became the lender of last resort for many hard-hit state-owned companies, and became a shadow banking powerhouse.
Does China allow Evergrande to collapse?
Beijing will not likely allow property giant China Evergrande Group to collapse as the government devises a way to get tough on the company without inducing sectorwide turmoil, market analysts said at a conference on Wednesday.
Will the Chinese government support Evergrande?
China’s government is stepping in to help Evergrande deal with its debt, as it has with previous large-scale corporate clean-ups. Evergrande said on Friday there was “no guarantee” it would have enough funds to meet debt repayments.
How does Huarong make money?
Huarong managed to become highly profitable by pursuing company equity. Many of Huarong’s acquisitions came directly from its purchase of distressed government debt.
Will evergrande survive?
It’s possible some version of Evergrande could survive, though it would likely be much smaller. Under orders from Beijing, most of the 200 or so cities with Evergrande projects have set up task forces to help manage the process, people familiar with the matter say.
What’s wrong with Evergrande?
Evergrande has more than $300 billion in financial obligations, hundreds of unfinished residential buildings and angry suppliers who have shut down construction sites. Things got so bad that the company paid its overdue bills with unfinished properties and asked employees to lend it money.
Will Beijing let Evergrande fail?