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China plans to merge three of its largest state-owned bad debt managers with its sovereign wealth fund China Investment Corp as part of an institutional reform plan, the official Xinhua news agency said in a report on Sunday, citing unidentified sources.
The placement plan China Cinda Asset ManagementChina Orient Asset Management and China Great Wall Asset Management, under the jurisdiction of one of the world’s largest sovereign wealth funds by assets, will take place “in the near future,” Xinhua added, without giving further details.
That announcement, along with another announcement from China’s securities regulator on Sunday that it would suspend lending of restricted stocks from Monday, underscores Beijing’s pledge last week to strengthen the “inherent stability” of its capital markets and boost market confidence.
Beijing’s moves follow a stock market downturn amid growing financial risks stemming from a debt crisis in the real estate sector. Last week, China’s central bank announced the largest cut in mandatory cash reserves for banks since 2021. It also announced a new policy mandate aimed at easing the liquidity crisis for Chinese developers.
The property market slumped after Beijing cracked down on developers’ heavy reliance on debt for growth in 2020, weighing on consumer growth and broader growth in the world’s second-largest economy.
China’s real estate problems are closely linked to the finances of local governments, as they typically derive a significant portion of their revenue from selling land to developers.
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2024-01-29 06:41:52
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