Fitch downgrades 4 Chinese national asset managers, warns of more cuts
Investing.com-- Fitch said on Thursday it had downgraded the issuer default ratings of four Chinese national asset management companies and flagged more potential downgrades on expectations of weaker government support and headwinds from a property market slump.
The ratings agency downgraded the IDRs of China Cinda Asset Management (HK:1359) and China Orient Asset Management Co to ‘A-’ from ‘A’, while the ratings of China Huarong Asset Management Co Ltd (HK:2799) and China Great Wall Asset Management were cut to ‘BBB’ from ‘BBB+’.
Fitch also said that China Cinda’s outlook was maintained at ‘stable’, while the other three asset managers were placed on Rating Watch Negative, which potentially heralds a further downgrade to their IDRs. The ratings agency said it was awaiting financial results for end-2023 to gauge whether there was any further deterioration.
Fitch said the downgrade was driven by increased uncertainty over potential government support for China’s major national asset managers, as well as a change in the criteria under which it viewed their standalone credit profiles.
“The downgrades reflect our view that the government's propensity to provide timely extraordinary support to the national AMCs has weakened in light of some AMCs' financial underperformance and capital constraints, and the government's inconsistent support stance to the sector,” Fitch analysts wrote in a note.
“We believe these dynamics have reduced the AMCs' ability to effectively perform their policy role of purchasing non-performing assets in the system.”
The ratings agency still saw a stable outlook for China Cinda, based on the firm’s stronger financial position in comparison to its peers. But the firm’s three other peers were placed on
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