On January 28, China Vanke’s stock gained following the management reshuffle, which boosted the hopes of the government. Investors welcomed the move, seeing it as a way to reduce short-term default risks and bring stability to the struggling property sector. However, analysts warned that it’s still unclear how much help the local government in Shenzhen will provide to ease Vanke’s financial challenges.
They added that if liquidity issues continue even with state support, it could hurt homebuyer confidence even more.
China Vanke Leadership Shakeup
On January 27, China Vanke, a major property company in China and about a third owned by state-run Shenzhen Metro, announced that Chairman Yu Liang and CEO Zhu Jiusheng have resigned, as the company predicts a record $6.2 billion net loss for 2024. Xin Jie, chairman of Shenzhen Metro, will take over as Vanke’s chairman, signaling more state involvement.
This move raises hopes that the government will step in to manage any repayment risks as the developer faces several debt deadlines this year.
China Vanke Liquidity Concerns
The Nanfang Daily reported on Monday, quoting the local state asset regulator that the Shenzhen government has the resources to support Vanke’s stable growth through Shenzhen Metro, including providing capital to the state-owned company if needed. The newspaper also quoted Shenzhen housing authorities and banks, who said they would assist Vanke’s liquidity through asset sales and financing.
Concerns about Vanke’s liquidity have grown this month, as the developer faces difficulty raising funds through asset sales and bank financing during the ongoing property market slump. As of June, Shenzhen-based Vanke’s debt was 331.3 billion yuan ($45.21 billion), with around $3.3 billion in public bonds due to mature later this year.
China Vanke Faces Financial Struggles
Vanke’s bonds rose on Monday after the company announced it would redeem its 2027 notes worth 1 billion yuan ($137.68 million) early in March. Investors saw this as a sign that Vanke would meet its immediate obligations without issue.
Investors view Vanke’s repayment risks as a key test of homebuyer confidence, which has started to stabilize in recent months. They’re concerned that banks might further restrict financing to the sector, putting pressure on developers, even state-owned ones, that haven’t defaulted.
China Vanke Stock Rose After Management Shakeup
Vanke’s Hong Kong-listed shares rose 2.1% on Tuesday, after opening 8.7% higher, while the Hang Seng Mainland Properties Index dropped 0.5%. China’s stock markets were closed on Tuesday for the Lunar New Year holiday.
