Hauck Aufhäuser Mother Fosson’s lamp in the focus of Chinese supervision | Markets | 09/13/2022

The Chinese authorities have ordered the country’s largest banks and state-owned companies to review their financial obligations to Fosun. The parent company of Germany’s Hauck Aufhäuser Lampe Privatbank (HAL) is one of the largest non-governmental conglomerates in China.

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A spokesperson for the company told Bloomberg that Fosun has not received any notification of the requests from authorities. A subsequent investigation with the State Asset Control Authority in Beijing revealed that this practice was part of normal investigations. Other companies have also been affected in the past. The company spokesperson said Fosun Group’s business remains healthy and resilient in the face of challenges.

Focus on debt reduction
However, a source said Fosun is taking steps to sell assets to reduce debt. As of the end of June, Fosun had 117.7 billion yuan in cash and 651 billion yuan in debt.

Fosun circle goofs
Two informative sources said the China Banking and Insurance Regulatory Commission (CBIRC) recently asked commercial banks to investigate their exposure to Fosun’s potential liquidity risk. This does not mean that the authority is urging banks to change their financing to Fosun.

Meanwhile, the Beijing branch of the State-owned Assets Supervision and Administration Commission (SASAC) reportedly asked local SOEs for more details about their relationships with Fosun Group. It was about holding shares as well as loans and guarantees.

It’s all in butter – or not?
Fosun president Guo Guangchang wrote in a Weibo post that many foreign Fosun teams have recovered from the epidemic and are in better shape than before. Moody’s Investors Service downgraded Fosun International last month, saying the asset sale is likely to reduce the size, diversification and transparency of the group’s investment portfolio.

Bond prices speak a different language
US dollar-denominated bonds guaranteed by the company were among the worst-performing three-month Chinese high-yield bonds in the Bloomberg Index. Long-term bonds are trading at less than 60 percent of their face value. Prices in these areas usually indicate distress. (kilobytes)