The real estate sector was in the spotlight on Friday, rising almost 3 per cent as a high-profile battle for control of Chinese developer Vanke saw another twist.
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The firm invested in Vanke because of its “strong” performance as the biggest property developer in China, the filling said.
Vanke’s original largest shareholder, state-owned conglomerate China Resources, became anxious as its shares in the company fell to just 15 percent.
“Evergrande’s purchase of Vanke shares is unlikely to be a pure financial investment, given that there are so many uncertainties in Vanke at the moment”, said Grant Ji, executive director of capital markets for northern China at CBRE Group, a USA commercial real estate company.
Vanke, China’s biggest residential developer by sales, has been in a battle for control since previous year when Baoneng Group displaced China Resources (Holdings) Co.as the property company’s largest stakeholder.
It is not yet clear where Evergrande fit n to the tussle for Vanke, which has been triggered by private conglomerate Baoneng. Some said they were waiting to see if Evergrande might increase its stake further.
Vanke has been battling its two largest shareholders over its management. Vanke chairman Wang Shi opposed the move, calling Baoneng “barbarians” with no credibility, and Vanke has asked regulators to investigate the funding of Baoneng’s share purchases.
The protracted power struggle between Vanke and Baoneng is already testing Beijing’s resolve, especially as it looks to reform its big corporations.
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The sales decline is mainly due to the flat season, but the battle for control may be another factor, said Huang Weibin, an investment manager at COFCO Futures Co Ltd. In November, it bought a 50 percent stake in Great Eastern Life Assurance Co.’s Chinese joint venture for 3.9 billion yuan.
