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Hong Kong’s Value Partners faces grim 2022 after China-led profit plunge

Value Partners
By Hui Ching-hoo   
March 15, 2022

Hong Kong asset manager Value Partners Group, battered by worsening market sentiment in China, saw its profit plunge 66.8% in 2021 and faces a gloomy 2022, amid the battle against the Omicron variant of the coronavirus, Beijing’s regulatory clampdowns on the property and other sectors, and a slowing economy.

The company’s net profit declined to HK$457.8 million (US$58.69 million) last year from HK$1.37 billion in 2020.

Performance fee income plummeted 86.3% to HK$200.5 million from HK$1.47 billion previously, while management fee income fell 8.5% to HK$926.7 million from HK$1.01 billion.

Assets under management as of December 2021 was $10.03 billion, down from $14.17 billion a year earlier.

Value Partners says 2021 was a “challenging year” for Asia’s financial markets, especially in China.

“In China, investor sentiment was further exacerbated during the second half, driven by a series of regulatory changes targeted at various sectors and concerns over the property sector,” the company says in a statement on March 10.

Around 68% of Value Partners’ clients are based in China and Hong Kong.

With its substantial business exposure to the Mainland and the various China-related downside risks, the company’s outlook for 2022 is cloudy, according to a fund analyst in Hong Kong.

“China recently reported over 1,000 new Covid-19 infections across dozens of cities, the highest daily infection rate in about two years. The new wave of coronavirus Omicron infection, together with the ongoing regulatory tightening, will continue to hurt China’s economic growth and weaken investors’ confidence,” he tells Asia Asset Management, speaking on condition of anonymity.

China’s gross domestic product expanded 8.1% last year and Beijing has set a growth target of 5.5% for 2022, the lowest since 1991.

Value Partners says it expects financial markets to remain volatile in the short term because of heightened geopolitical tensions but believes that in the long term “it is poised in capturing new opportunities with its efforts in improving the group’s business and product suite”.