Chinese national asset management companies' (AMCs) earnings will continue to be sensitive to economic cycles and fair value risks, which will serve as a burden to their moderate capitalization, Fitch Ratings said in a Thursday release.

The exposure of AMCs' earnings to risks linked to the disposal of underlying collateral has risen, with Fitch assessing the share of financial instruments at fair value to interest-earning assets increasing to 44% in H1 from 31% in 2020.

The trend offsets AMCs' efforts to lessen riskier restructured distressed assets, which should have cut impairment charges in the medium term.

Fitch believes the earnings of AMCs, which include China CITIC Financial Asset Management (HKG:2799) and China Cinda Asset Management (HKG:1359), will bounce back in tandem with a recovery in China's economy.

The rating agency saw an uptick in their ratio of annualized overall pre-tax profit to average assets to 0.4% in H1 from 0.3% in 2023.

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