Investors eye Chinese Covid-19 NPLs but barriers remain

Author: Karry Lai | Published: 15 Apr 2020

Levels of non-performing loans (NPLs) are expected to rise in China as the economy works to recover from the impact of Covid-19. However, investment firms want authorities to make it easier to access portfolios.

In February, PwC estimated that China is home to $1.5 trillion NPLs. S&P estimates that they could rise by $800 billion in 2020.    

Opportunities ahead

"It's too early to tell what the impact of Covid-19 will be on NPLs, but it is definitely impacting the cash flows of companies and the balance sheets of banks," said Ron Thompson, managing director at consultancy firm Alvarez & Marsal Asia. "The China-US trade war and China's deleveraging efforts have been accelerating the growth of the NPL pool, and the virus is one more thing that will add to that."

Ben Fanger, managing partner at ShoreVest Partners, an institutional private investment firm in Chinese...