LA Private

HK property showing no signs of steadying

There might be signs emerging in China of a steadying in the stricken property sector with more reports of government support to be wrapped up by June and major developers presenting lists covering hundreds of projects that could get government support through local administrations.

But don’t tell investors in Hong Kong where they sent the shares of China Vanke – the biggest mainland developer left standing – to a record low on Tuesday of 4.72 Hong Kong dollars (around 93 cents A) – down nearly 13%.

That left Vanke shares down more than 30% year to date.

The fall came after the release of the company’s 2023 results late last week which were not good, with a 50% fall in profit (before abnormal items) bu† told the market it planned to cut 100 billion yuan (that’s around $US14 billion) in debt over the next two years to try and boost cash flow.

Vanke’s slump also came after the move by privately-owned rival developer (but even more financially-imperilled) Country Garden to have its shares suspended in Hong Kong after failing to file its 2023 results.

Country Garden has defaulted on its debts (so have some smaller developers) along with the former giant, Evergrande which is now in liquidation after a Hong Kong court issued a winding up order in late January. Country Garden faces a similar application from a foreign creditor in a Hong Kong court on May 17.

Country Garden said “due to the continuous volatility of the industry, the operating environment the Group confronting is becoming increasingly complex” when it revealed late last week that its earnings would be delayed.

In October, the company said falling sales had left it unable to make a $HK470 million ($US60 million) interest repayment and it warned “adverse market conditions” could leave it unable to pay its international debts in future.

Country Garden had $US192 billion worth of debt at the end of June 2023, making it one of China’s most heavily indebted property companies, but well behind Evergrande which had debts of more than $US320 billion when it was ordered to be wound up.