China’s property crisis infects top-shelf market

Shimao Services Holdings

15/12/2021 03:21

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own.)
    By Yawen Chen
    HONG KONG, Dec 15 (Reuters Breakingviews) - Shimao Group’s
shares plunged after a deal between two affiliates appeared
designed to raise cash quickly. On paper, the developer is in
sound health; some of its crashing bonds enjoy investment-grade
ratings. If those scores aren’t credible, more volatility is on
the way. 
    Full view will be published shortly.
    Follow @ywchen1 https://twitter.com/ywchen1 on Twitter
    
    CONTEXT NEWS
    - Shanghai Shimao said on Dec. 14 it planned to sell its
property management business, including all related assets,
liabilities and operations, to sister firm Shimao Services, for
1.65 billion yuan ($259 million). Shimao Services said the deal
will help it expand into the commercial property management
segment.
    - Both Shanghai Shimao and Shimao Services are controlled by
Shimao Group Chairman Hui Wing Mau. Shares of Shimao Services
fell 32% to HK$4.84 on Dec. 14. Shimao Group shares fell 19.9%
while Shanghai Shimao declined 3%. 
    - In a statement issued in the evening of Dec. 14, Shanghai
Shimao said it is operating normally and is able to service its
debts.
    - The Shanghai stock exchange has asked Shanghai Shimao to
justify the planned sale. Shanghai Shimao is required to reply
to the inquiries before Dec. 22.

 (Editing by Pete Sweeney and Katrina Hamlin)
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