China developer Vanke’s fate in question as shares and bonds drop amid rumours
A government takeover could be seen as a positive development in the market, according to an analyst
A takeover could be seen as a positive development in the market, according to an analyst, as the company and other major builders continue to grapple with a looming wave of debt maturities this year, all while the country’s housing prices continue their downward trend.
“We think it’s still too early to tell if Vanke will be taken over by the government,” said Jeff Zhang, Equity Analyst at Morningstar. “That said, the firm has more than 30 billion yuan [US$4 billion] of bonds due in 2025, and we expect most to be refinanced via negotiations with creditors.”
A state takeover could help with near-term debt repayment, which the market may view as positive, he said, adding that there are few precedents for the Chinese government acquiring non-state-owned developers, and uncertainties remain about how such a move would be executed.
Vanke’s shares fell 3.29 per cent to HK$4.70 on Friday following media reports on Thursday evening that its president and CEO, Zhu Jiusheng, had been detained by police. The company’s mainland-listed shares dropped by 3.63 per cent to 6.63 yuan. Shenzhen Metro Group, operator of the city’s rail transit network, is Vanke’s largest shareholder.
Zhu posted about his whereabouts on Chinese social-media platform WeChat around 12.45am on Friday, according to a screenshot seen by the Post. In the post, Zhu promoted Vanke’s rental property business while saying, “returning to work after the [Chinese] holiday, a brief transition period”.
