Vanke shares plunged on Friday after state media reported that its chief executive had been detained and authorities were monitoring operations.
Vanke's share price plummeted 9% at the close of trading on the Hong Kong Stock Exchange, but the decline recovered to 3% at the close. However, the news deepened concerns about the country's debt-ridden real estate sector.
Chief executive Zhu Jiusheng was detained on Wednesday, the Economic Observer reported on Thursday, without elaborating on the reasons. The developer may be subject to government takeover and restructuring, sources said.
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Vanke declined to comment when contacted by Reuters, and the Ministry of Public Security did not respond to a faxed request for comment. The reporter called the Shenzhen Municipal Government, but no one answered.
“Make or break moments”
If the news is true, developers will find themselves in a “make-or-break” moment, depending on whether the government decides to bail out or let it default on its debt, JPMorgan analysts said in a note to clients.
“The CEO being 'taken away' or the task force stepping in may sound negative at first, but we think it is important to note whether the government's ultimate decision is to support Vanke in meeting its debt obligations.”
It is not uncommon for authorities to detain former top executives.
Notable figures include Xu Jiayin, Chairman of Evergrande GroupHe has not been seen in public since 2023, two years after the world's most indebted developer defaulted on most of its $300 billion in debt.
Several executives have been detained, with little or no public information on their fate.
Bond selloff intensifies
The development unsettled investors as authorities work to pull the housing sector out of a debt crisis that has weighed on it since 2021, including through lower mortgage rates and minimum down payment requirements.
Vanke's Hong Kong-listed shares fell as much as 9% on Friday, hitting their lowest level since September, while shares listed in Shenzhen fell more than 4%.
The developer's May 2025 dollar notes were bid at 56.491 cents, compared with 63 cents the previous day.
Two RMB government bonds owned by Vanke fell more than 20%, triggering a trading suspension on the Shenzhen Stock Exchange.
Vanke, a leader in China's real estate market, has faced an intensification of a sell-off in bonds over the past week amid growing concerns that its massive debt is coming due amid an industry crisis that has left homes unfinished and businesses bankrupt.
The company's financial woes became public early last year as developers sought to extend debt maturities as monthly sales fell below break-even levels. In terms of sales, the company ranked fifth last year and ranked second in 2023.
Its CEO, Zhu, worked at the Shenzhen branch of state-owned bank China Construction Bank for 19 years before joining Vanke in 2012 and becoming CEO in 2018.
Friends said hours after the Economic Observer report, a post appeared on Zhu's WeChat social media account just after midnight on Friday. Screenshots shared by netizens showed that the post was a repost of Vanke’s apartment rental advertisement.
“People are still concerned after the post; we still don't know how the company is doing,” said UOB Kay Hian director Steven Leung.
“If even developers with large state-owned shareholders are in trouble, it could mean that more private developers could be in trouble as well.”
- Reuters Additional editing by Jim Pollard
See also:
China Country Garden plans to restructure US$10.3 billion in overseas debt
China Country Garden has “provided creditors with a debt restructuring plan”
China increases spending on housing projects to $562 billion
China asks banks to roll over $13 trillion in local debt at lower interest rates
Major Chinese cities to lift all restrictions on home buyers
China Country Garden liquidation hearing suspended for 6 months
Evergrande Group Chairman Xu is being held in a special detention center
Vanke's performance rebounds, funds tighten
Minister: China will favor developers who benefit the masses
China Country Garden “hires Kroll to conduct liquidation evaluation”
PwC under investigation for “facilitating Evergrande's misconduct over many years”
