A growing number of Chinese corporations are selling off their assets before 2018 ends, in a bid to shore up their financial figures before their books close and to avoid getting expelled from stock exchanges. This move by companies, big and small, is a response to a tightening in bank loan opportunities and a slowing economy.
To date, some 33 stock-exchange listed firms have resorted to selling physical assets to be liquid, writes the South China Morning Post. Hunan TV & Broadcast Intermediary reportedly sold a valuable oil painting worth CNY208.8 million (US$30 million) so it can have enough cash to address a loss of around CNY130 million over the last nine months. The said art is the 1940 work of Xu Beihong titled "Foolish Man Removes the Mountain" and was purchased by its largest shareholder.
China's fourth-biggest airline, Hainan, also reportedly let go of two of its aircraft for CNY1 billion to its associate HNA Tourism. Chengdu-based investment bank Huaxi Securities also has expressed plans to sell one of its key properties for CNY817 million, while Guoyuan Securities has already announced that its property in Hefei is for sale at CNY15.7 million.
To be clear, companies are allowed to dispose of their assets to dress up their yearly financial reports. According to Guo Shiliang, a finance expert and columnist, the next step for regulators is to check if the material disclosures are accurate and if the sales were conducted at fair value, in order to protect shareholders. The Chinese capital market is expected to continue seeing a slowdown in the next year, and over 3,000 listed firms have already pre-warned their investors to expect a drop in profits as the economy continues to be volatile.
