(Yicai Global) Jan. 5 -- Shares in troubled China Huarong Asset Management plunged as much as 55 percent today after the country’s biggest distressed debt manager resumed trading after a nine-month suspension for failing to disclose its 2020 financial results.

Huarong’s stock price [HKG:2799] closed down 50 percent at HKD0.50 (USD0.06) today, giving it a market capitalization of HKD21 billion (USD2.7 billion). Earlier in the day it had sunk to HKD0.46. At the time of suspension in April last year, the Beijing-based asset manager was worth HKD82 billion.

The lack of faith in the stock comes despite a CNY42 billion (USD6.6 billion) state-backed bailout in November last year, when five investors, namely Citic Group, China Insurance Rongxin Fund, China Life Insurance Group, ICBC Investment and China Cinda Asset Management, stepped in to buy new shares at CNY1 (USD0.20) apiece.

Following a huge bribery and corruption case involving former Chairman Lai Xiaomin, who was executed in January last year, debts of CNY103 billion (USD16.1 billion) gradually came to light. 

But Huarong, whose biggest stakeholder is the Ministry of Finance, returned to profit in the first half last year, reporting a gain of CNY158 million (USD24.7 million), according to its earnings results published last August. This is still a long way from the same period in 2017 when it raked in profit of CNY26.6 billion (USD4 billion).

The Chinese government set up four major asset management companies in 1999, including the predecessors of Huarong and Cinda, to defuse systematic financial risks at state-owned banks and tackle non-performing policy assets separated from state capital. Huarong transformed into a financial holding group in 2012 and Lai became its chairman.

Editor: Kim Taylor