Core Points - The newly released "Interim Measures for the Supervision and Administration of Local Asset Management Companies" establishes a regulatory framework that significantly transforms the local non-performing asset disposal industry [1][2][3] - The measures impose strict operational requirements, including a 30% threshold for core business, a leverage cap of three times net assets, and a 10% concentration limit on single client financing [1][5][6] Regulatory Background - The introduction of the measures is a response to long-standing issues in the industry, such as deviation from core business and regulatory arbitrage [2][3] - A report indicated that many local AMCs have engaged in unauthorized external financing, with significant amounts of funds becoming non-performing or overdue [2][3] Business Focus and Risk Management - The measures require local AMCs to focus on core activities related to the acquisition, management, and disposal of non-performing assets, mandating that at least 30% of new investments be allocated to these activities [4][7] - The measures also set limits on single client financing to mitigate concentration risks and enhance overall risk management [5][6] Industry Impact - The new regulations are expected to accelerate industry differentiation, with weaker local AMCs facing greater pressure to transform or exit the market [11][12] - Statistics show that the average financial non-performing asset ratio for local AMCs has been above 30% from 2021 to 2023, indicating a trend of increasing reliance on non-performing assets [9][10] Financial Performance - Local AMCs have shown stable asset growth, but net profit has declined, indicating a "growth without profit" scenario [8] - The average leverage ratio among local AMCs remains high, with only a few companies maintaining an asset-liability ratio below 50% [10][12] Future Outlook - The measures are anticipated to compel AMCs to innovate their asset management business models and improve their management capabilities [12] - The industry is likely to see increased consolidation, with poorly performing AMCs facing potential exit or integration [12]