The Economist13 Aug, 08:37economist.com

Is China’s debt-bomb squad about to blow up?

Firms tasked with defusing credit crises are getting into trouble

Headline and excerpt published by The Economist. The full article is on their site.

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Deterioration in China's state-owned asset management companies and bad-debt handlers signals deepening stress in the Chinese financial system, with spillover risk for banks and broader credit markets.

Headwind (4)

CITIC Groupknock-onAs a major state-owned conglomerate with significant asset management and debt-resolution exposure, CITIC faces pressure if these operations deteriorate.
China Development Bankknock-onPolicy banks have deep involvement in credit crisis resolution; their profitability erodes as bad-debt management becomes costlier and less effective.
Industrial and Commercial Bank of China1398.HKknock-onAs China's largest bank by assets, ICBC faces deteriorating loan-loss mitigation and recovery rates if state asset managers cannot resolve distressed credits.
HSBC HoldingsHSBA.Lknock-onHSBC's large China exposure and significant lending to Chinese corporates creates counterparty risk if the credit system stress worsens.

Sectors

Chinese banks
Global financial services

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