China Vanke, the next Chinese real estate company on the brink of bankruptcy, has unexpectedly received strong support from authorities in its hometown of Shenzhen, China.
In talks with financial firms, the Shenzhen State-owned Assets Supervision and Administration Commission said it has confidence in Vanke and has sufficient cash and necessary financial tools.
State-owned Metro Group, Vanke's largest shareholder, also said it has no plans to reduce its stake and is ready to buy the company's bonds at the right time.
These statements are seen as contrary to China's previous moves with Evergrande and Country Garden,
China Vanke, China's next real estate company on the brink of bankruptcy, has unexpectedly received strong support from local governments.
China Vanke unexpectedly received strong support from authorities in its hometown Shenzhen (Photo: CNBC).
At a time when two of the country’s biggest real estate companies are struggling, China has offered little in the way of support to restore market confidence. Evergrande and Country Garden have now both declared bankruptcy.
China's property woes have entered their second year and authorities, at both the central and local levels, are expressing urgency in preventing further fallout from the turmoil in a sector that accounts for 25% of economic output.
In a statement after the meeting, Vanke said it would definitely repay domestic and foreign debt on time and the market did not need to worry about it.
However, whether this is a turning point for China's real estate market remains unclear. China's support through the Shenzhen city government has helped Vanke get out of financial difficulties.
For now, throwing a lifeline to Vanke could at least help reduce the risk of another property giant collapsing, especially as China grapples with the problems of Country Garden, Evergrande and a host of smaller developers.
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