Shares of beleaguered state-backed developer China Vanke fell by more than 8 per cent between Thursday’s market close and Friday morning amid rumours that its president had been detained by police, intensifying concerns over the company’s struggle to manage its mounting debt load.
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Vanke’s shares opened at HK$4.47 on Friday, the lowest since last September, after closing at HK$4.86 Thursday afternoon. The company’s mainland-listed shares also fell by more than 4 per cent during the same period, opening at 6.6 yuan.
The country’s largest property developer by revenue, according to Bloomberg data, Vanke has US$4.9 billion in onshore and offshore bonds coming due or facing redemption options this year. The share-price decline follows a report by local media outlet the Economic Observer on Thursday evening that claimed that the company’s CEO Zhu Jiusheng had been taken away by police.
Zhu was seen promoting the company’s real estate business on Chinese social media platform WeChat early on Friday, local media outlet Cailian reported.
“The latest development may be due to the fact that Vanke has sizeable of debt … due in 2025, and it looks like Vanke may not be able to repay it on time, illustrated by the sharp drop of its bond prices recently,” said Raymond Cheng, a managing director at CGS International Securities in Hong Kong.
“The news definitely will further hurt market sentiment of property market, as Vanke is a household brand in China. Meanwhile, we think that the government’s direct step may help to prevent further collapse of the issue if Vanke is eventually taken over.”