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Chinese investment firm China Huarong’s shares crash after state-backed bailout

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According to the BBC, shares of the scandal-plagued China Huarong Asset Management have dropped by 50% following a state-backed bailout of nearly $6.6 billion.

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

Huarong shocked Asian stock markets last August when it revealed a record loss of nearly $16 billion.

According to the report, 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, ceased trading in its shares on April 1 of last year.

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

According to the report, this triggered a sell-off in Huarong’s US dollar-denominated bonds, which spread to the bonds of other Chinese companies.

Huarong, whose largest shareholder is China’s Finance Ministry, announced a $24.5 million profit for the first half of 2021 and a nearly $16 billion loss for 2020 in August.

The asset manager expanded far beyond its original remit during Lai’s tenure as chairman.

Investors saw the firm’s crisis as a litmus test for the Chinese government’s approach to corporate failures.

About the author

Brendan Byrne

While studying economics, Brendan found himself comfortably falling down the rabbit hole of restaurant work, ultimately opening a consulting business and working as a private wine buyer. On a whim, he moved to China, and in his first week following a triumphant pub quiz victory, he found himself bleeding on the floor based on his arrogance. The same man who put him there offered him a job lecturing for the University of Wales in various sister universities throughout the Middle Kingdom. While primarily lecturing in descriptive and comparative statistics, Brendan simultaneously earned an Msc in Banking and International Finance from the University of Wales-Bangor. He's presently doing something he hates, respecting French people. Well, two, his wife and her mother in the lovely town of Antigua, Guatemala.

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