Vanke stock, bonds sell-off resumes on liquidity concerns

Investors sold China Vanke stock and bonds yesterday, picking up from where they left off last week as concern over the developer’s liquidity trumped fundraising plans and assurance from a business partner.

The price of China Vanke shares in Hong Kong fell 7.1%, having finished last week down 8.1%.

The developer’s Shenzhen-listed shares lost 4.7%, exacerbating last week’s 3% decline.

The state-backed firm’s onshore bond due 2028 was temporarily suspended from trading after plunging over 20% to 64 yuan in the afternoon, while a 2027 bond reversed gains to ease 3.6%.

Its other yuan bonds generally stabilised, however, with small gains of over 1%.

China has struggled to contain the debt crisis that has gripped the sector since mid2021 and seen property giants including China Evergrande Group and Country Garden default on billions of dollars in debt.

Shenzhen-based Vanke, a well-known household name with high quality projects across major cities, had been seen by the market as a financially sound developer, especially with backing from its largest shareholder, state-owned Shenzhen Metro.

Any repayment trouble by Vanke could further hamper market confidence, analysts said.

Market concern came after credit data provider Reorg said yesterday China’s second-biggest property developer by sales – after state-owned Poly Development – was in discussion with insurers to extend debt maturities, and that management had visited Beijing to seek government assistance.

Local media subsequently reported that New China Asset, a unit of New China Life Insurance, had rejected proposals to extend maturities of China Vanke debt it held.

On Sunday, New China Asset said it has been maintaining normal business cooperation with China Vanke, and that reports about the pair are “untrue”.

China Vanke yesterday declined to comment when contacted by Reuters.

Last Friday, China Vanke said it planned to raise 1.2 billion yuan (RM787 million) by spinning off three warehouse logistic parks owned by a unit and listing them in Shenzhen through an infrastructure real estate investment trust. – Reuters