China Huarong Asset Management, a major player in the bad-debt management sector, is experiencing a significant boost in its shares following its forecast of a profitable year in 2023. This comes after the company received a substantial capital infusion from state-owned financial institutions.
The shares of Huarong Asset Management saw a jump of up to 15%, reaching a high of 0.38 Hong Kong dollars (US$0.05) on Tuesday morning. At the midday break, the shares were still performing well with a 1.54% increase.
Primarily owned by China's Ministry of Finance, Huarong Asset Management announced on Monday that it anticipates a profit range between CNY1.0 billion to CNY2.0 billion for this year. This is a stark contrast to the CNY27.58 billion loss incurred in the previous year.
The positive performance of the company is attributed to gains from changes in the fair value of equity assets due to an improved outlook for the capital market and a stronger asset-management business.
In late 2021, Huarong Asset Management received a capital injection of US$6.5 billion from state-owned financial institutions like Citic Group, Industrial & Commercial Bank of China, and China Life Insurance.
It is worth noting that Moody's Investors Service recently downgraded Huarong Asset Management's rating due to concerns surrounding China's property market downturn and slowing economic growth.
Looking ahead, Huarong aims to focus on developing its core business and leveraging the advantages of Citic Group in the finance sector by 2024.