China investment firm's shares slump after $6.6bn bailout

Shares in scandal-hit China Huarong Asset Management have slumped by more than 50% after a state-backed bailout of almost $6.6bn (£4.9bn).

The company's shares had been suspended on the Hong Kong Stock Exchange for the last nine months.

Huarong rocked Asian stock markets in August last year when it revealed a record loss of close to $16bn.

The firm's former chairman Lai Xiaomin was executed last year after being found guilty of corruption.

Huarong, one of four state-owned distressed-debt managers, halted trading in its shares on 1 April last year.

The move came after the firm missed a deadline at the end of March to file its earnings for 2020.

That sparked a rout in Huarong's US dollar-denominated bonds that spread to the bonds of other Chinese companies.

In August, Huarong, which counts China's finance ministry as its largest shareholder, announced a profit of $24.5m for the first half of 2021 and an almost $16bn loss for 2020.

The company had earlier in November said that it would receive a cash injection of $6.59bn from a group of state-backed investors as part of its rescue plan.

Huarong, which is majority-owned by China's Ministry of Finance, was set up in 1999 to take bad debts off the country's largest state-owned banks.

During Mr Lai's time as chairman the asset manager expanded far beyond its original remit.

The crisis that engulfed the firm was seen by investors as a test of the Chinese government's approach to corporate failures.

Mr Lai was arrested in 2018 on charges of taking 1.8bn yuan (£210m, $280m) in bribes over a 10-year period.

His death sentence was heavily criticised, with rights group Human Rights Watch saying China was "clearly taking a major step backwards."

It was one of the most severe sentences to stem from President Xi Jinping's anti-corruption drive.