COVID-19 has put pressure
on the asset quality and
earnings of distressed
asset management companies
(“DAMCs”) but has also
increased their business
opportunities as systemwide
bad debts build up. We
expect DAMCs to maintain
stable leverage level
amid COVID-19, while earnings
are set to come under
pressure as credit costs
increase. We anticipate
stable government support
for DAMCs as they remain
a major channel for cleaning
up financial institution
non-performing assets (“NPAs”) in China.