Huarong International Unit Slumps After 5-Month Share Suspension
(Bloomberg) -- Huarong International Financial Holdings Ltd., an offshore investment unit of the embattled China Huarong Asset Management Co., slumped as much as 31% after resuming trading in Hong Kong following five months of suspension.
The stock fell 29% to HK$0.160 as of 9:53 a.m. In a filing on late Tuesday, the company said its management believes it can ensure continued operation over the next 12 months.
Troubles at China Huarong and some of its units emerged in late March when the state-backed bad loan manager delayed its annual reports, roiling markets throughout Asia amid concerns about whether it would be able to cover its $238 billion in liabilities as of June, including more than $20 billion of offshore bonds.
State-owned investors including Citic Group, China Insurance Investment Co. and China Life Asset Management Co. on Aug. 18 agreed to recapitalize Huarong as it flagged a record loss for 2020, slashing shareholder equity by nearly 85%. Huarong disclosed on Sunday that its capital buffers failed to meet regulatory requirements even after returning a profit of 158.3 million yuan in the first half, and its shares remain suspended.
Huarong International Finance on Sunday posted a first-half loss of HKD$446.5 million ($57.4 million), after losing HK$2.79 billion in 2020. It also named Lee G. Lam as a new non-executive director.
The unit is majority controlled by Huarong International Holdings Ltd, the key offshore financing arm of the nation’s embattled distressed loan manager. Huarong International Holdings issued or guaranteed most of China Huarong’s dollar bonds.
©2021 Bloomberg L.P.