Vanke’s safety net models new face of China Inc

Onewo

07/11/2023 02:53

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are his own.)
    By Chan Ka Sing
       HONG KONG, Nov 7 (Reuters Breakingviews) - The $18 bln
property developer’s shares jumped after its owner Shenzhen
Metro pledged unreserved support and a $1.4 bln tool kit should
it need a rescue. As the state takes a bigger role in business,
Vanke illustrates how that could reduce both returns and risks
for investors. 
        
    Full view will be published shortly.
        
    CONTEXT NEWS
    Shenzhen Metro, the largest shareholder of China Vanke, said
on Nov. 6 that it has prepared more than 10 billion yuan ($1.38
billion) worth of “market tools” to inject liquidity into
China’s second biggest developer by sales if necessary. The
support includes taking over some of Vanke’s urban renewal
projects. 
    The State-owned Assets Supervision and Administration
Commission of the People’s Government of the Shenzhen
Municipality (Shenzhen SASAC) owns Shenzhen Metro and also
attended the meeting. It said it will coordinate other
state-owned enterprises and financial institutions to support
Vanke if needed.
    Shenzhen Metro owns 27% of Vanke. It will also buy Vanke
bonds from the open market in order to boost confidence, Reuters
reported. Vanke’s bonds and shares have seen big selloffs last
week, after a rating downgrade from Fitch on Oct. 17.
    Hong Kong and Shenzhen-listed shares of Vanke closed up more
than 7% and 6% respectively on Nov. 6, while its property
management unit Onewo jumped almost 12%.

 (Editing by Una Galani and Thomas Shum)
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