Shares of China Vanke Co., one of China’s largest property developers, slumped on Monday, as the company’s latest earnings weakness further weighed on already-fragile investor sentiment.
Vanke’s Hong Kong-traded stock dropped by as much as 9.2% in morning trade and were last down 7.1% at 10.51 Hong Kong dollars (US$1.34), while its Shenzhen shares tumbled 5.3% to 13.58 Chinese yuan (US$1.87).
The steep losses came after Vanke on Friday posted a 14% drop in its third-quarter net profit, after 10% earnings growth in the first half of the year. The developer’s margins and net gearing also deteriorated.
Vanke’s fall added to a broader selloff in Chinese real estate stocks on Monday, as a change of leadership at another major developer stoked investors’ concerns about worse-than-expected liquidity problems in the industry. The Hang Seng Mainland Properties Index was down 6.1%. Longfor Group Holdings Ltd. led the slump with a 24% decline, after its founder, Wu Yajun, stepped down as chairperson.
“The resignation is an apparent vote of no confidence in the industry,” said Stephen Innes, Managing Partner at SPI Asset Management.
