By Justina Lee
China Huarong Asset Management Co. expects to post a large net loss in the first half, weighed by market volatility, macroeconomic pressure and a slowdown in the real estate sector.
The financial asset manager forecast a net loss for the first half of about 18.88 billion yuan ($2.78 billion), compared with net profit of 158 million yuan a year earlier.
“The group has recognized credit impairment losses in the current period, which have increased significantly year-over-year,” it said in a filing late Tuesday.
China Huarong said it was implementing some countermeasures, including “relying on substantial shareholder resources” and “revitalizing risky assets to foster new earnings growth engines.”
“In the second half of 2022, the long-term positive fundamentals of the Chinese economy remained unchanged, and macroeconomic policies will play a more active role in expanding demand,” the company said.
The asset manager also said in a separate filing that it was selling a 76.79% stake in Huarong Trust to China Trust Protection Fund for 6.15 billion yuan. Huarong Trust is a national non-banking financial institution.
China Huarong, one of the country’s largest bad debt buyers, was founded in the late 1990s to handle problematic commercial loans from major state-owned banks.
The company received a capital injection of $6.5 billion via a complicated restructuring of public financial institutions in 2021.
Write to Justina Lee at [email protected]