Lai Xiaomin, the then-chairman of China’s Huarong Asset Management, speaks at the Boao Forum for Asia (BFA) Annual Conference in 2016.
(STR/AFP via Getty Images)
Given its low tolerance for market and political instability, the Chinese government will likely bail out embattled state lender Huarong Asset Management -- highlighting China’s struggles with debt management and long-term economic health, while propagating moral hazards in global finance. Huarong’s failure to issue its 2020 financial statements by the March 31 deadline has cast doubt on the financial health of one of China’s big four asset management companies (AMCs), with Moody’s Investors Service and Fitch Ratings both recently downgrading the company’s credit rating. Huarong has since announced it would also miss the April 30 extended deadline to release its annual results, with the firm blaming both delays on its auditor processing an unspecified transaction. Amid the uncertainty, the firms’ dollar bond yields have skyrocketed, with one bond’s yield rising from 3% to 23% in just two weeks. These developments have increased speculation Beijing may intervene significantly to bail out...
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