Chinese Property Developer Vanke Says It's Addressing Liquidity Pressure

What what war did we hear from in this statement? Loretta. So that statement came over the weekend. Venky the previous week was really embroiled in a lot of troubles. There were the S&P downgrade which makes the company become a junk rated a junk rated company among all three rating agencies. It’s facing rumors about some of the executives in this province. Shandong people were saying that some of its its executives were grounded for being banned from traveling abroad. So there’s a lot of speculation around the company and we saw some market weakness over the past week and now Venky is saying admitting essentially that it’s gotten liquidity trouble and near term business operations. Faces challenges and. Saying it’s going to deploy some internal resources to solve this problem before resorting to maybe government help. Hey Loretta, how likely does it look like Vanky will get through this liquidity challenge? Yeah. Well, it seems like now it largely depend on the kind of liquidity pool that he can tap from the banks because it’s such a big scale developer and we know that home sale has been slumping across the board for all these Chinese developers including Banki. So over the past quarter in 2024, actually state owned developers saw their sales dropping almost 50% and that’s in line with the 60% year on year drop for private companies. So that gap is really narrowing. So thank you faces all sorts of challenges. On the operational front, on its business front, so the only viable financing channel that we believe thank you can tap right now is from the government. It’s got the almost 30% stake in Banky from the Shenzhen government and we’re looking to hear more from, you know, its backers what kind of financing plan they’re going to provide for Venky. And what is this latest situation with Venki actually going to tell us about the overall real estate sector now? Well, the overall real estate is still finding a bottom as we can tell. You know, home sales continue to drop and we haven’t really seen how that situation is going to resolve. There’s been rate cuts, there’s been lowering the mortgage payments, there’s been loosening of home buying restrictions that had so far failed to help the real estate market. And I think Vanqui will tell you just how far that confident crisis in China’s. Home market has gone. And it’s going to further, I think, hurt homebuyer confidence.