The amount misappropriated by Huarong Asset Management’s Lai Xiaomin, was the highest since the founding of the People’s Republic of China in 1949, according to the judge that presided over the case, reported the Financial Times.
But investors’ attention has now turned to a number many times bigger: the $22bn of dollar-denominated bonds owed by the state-owned company.
A sell-off in Huarong’s bonds, which was triggered by the group’s failure to release its financial results at the end of March, has become a test case for a longstanding conviction that Beijing will always bail out state-backed companies that borrow on international markets.
The prices of some of Huarong’s bonds maturing in 2022 plunged to as low as 67 cents on the dollar last week. They partially recovered on Tuesday after the Chinese regulator said that Huarong’s operations were “normal”, according to local media.