China plans to consolidate 3 distressed debt asset managers with its largest sovereign wealth fund, state media reports

China is planning to merge China Cinda Asset Management, China Orient Asset Management, and China Great Wall Asset Management under the supervision of one of the world’s largest sovereign wealth funds by assets in the near future, according to a report by Xinhua on Sunday. This move comes in the wake of a stock market turmoil caused by growing financial risks arising from a debt crisis in its real estate sector. China’s actions signify its commitment to stabilizing its capital markets and boosting market confidence.
China aims to merge three of its biggest state-owned distressed debt asset managers with its China Investment Corp sovereign fund as part of an effort to reform institutions, as reported by the official Xinhua news agency. The plan to place China Cinda Asset Management, China Orient Asset Management, and China Great Wall Asset Management under the authority of one of the world’s largest sovereign wealth funds by assets will occur “in the near future,” said Xinhua, though no further details were provided.
This announcement, combined with another from China’s securities regulator, underscores Beijing’s promise to strengthen the “inherent stability” of its capital markets and enhance market confidence. Beijing’s actions follow a stock market rout amid escalating financial risks resulting from a debt crisis in its real estate sector. Last week, China’s central bank announced its biggest reduction in mandatory cash reserves for banks since 2021. It also revealed a new policy directive aimed at alleviating the cash crunch for Chinese developers.
The property market declined after Beijing cracked down on developers’ heavy reliance on debt for growth in 2020, impacting consumer and overall growth in the world’s second-largest economy. China’s real estate challenges are closely linked to local government finances, as they traditionally relied on land sales to developers for a significant portion of revenue.

Author: OpenAI