China Vanke’s management reshuffle signals bailout for troubled developer, analysts say

Name: Boom, bust and borrow: Has China’s housing market tanked?
Uploaded: 2025-01-28T06:30:09.000Z
Duration: 10 min 57 s
Description: Boom, bust and borrow: Has China’s housing market tanked?

Support for Vanke could see banks extend loans, reduce discounts on asset sales and boost homebuyers’ confidence, CGS’ Raymond Cheng says

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China Vanke was once the mainland’s second-largest developer by sales. Photo: Reuters

Cheryl Arcibal

Published: 2:30pm, 28 Jan 2025Updated: 4:20pm, 28 Jan 2025

The Shenzhen government is likely to bail out China Vanke, allowing the troubled mainland Chinese developer to overcome its liquidity problems, according to industry observers.

Following the board changes announced on Monday, Vanke’s shares surged by as much as 6.89 per cent on Tuesday, before paring gains to close 2.1 per cent higher at HK$5.78.

Vanke, once China’s second-largest developer by sales, named Xin Jie as its new chairman. Xin is also the chairman of state-owned Shenzhen Metro Group, or SZMC, the company’s largest shareholder.

The financial muscle of Vanke’s main backer should be sufficient to rescue the developer, according to Raymond Cheng, managing director at CGS International.

He pointed out that SZMC is backed by the Shenzhen State-owned Assets Supervision and Administration Commission, which has assets of more than 5 trillion yuan (US$689 billion), while SZMC has assets of 800 billion yuan of its own.

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Boom, bust and borrow: Has China’s housing market tanked?

Cheng said a rescue “could give rise to three positive changes for Vanke”, namely give confidence to financial institutions to extend loans, reduce discounts on its asset sales and boost homebuyers’ belief in its projects.