China probes property executives for possible legal violations
The country is probing a number of executives at state-owned property companies, signalling an expansion of the government’s crackdown on misconduct that has centred on the financial and technology sectors.
In a flurry of announcements this week, authorities said they were investigating at least four current and former top managers, including Xiamen C&D Real Estate chairman Zhuang Yuekai, who is suspected of “serious” law violations.
President Xi Jinping’s corruption clampdown on the nation’s sprawling financial sector has brought down more than 40 officials at state banks and regulators. The latest probes could signal authorities are widening the campaign to include the beleaguered property sector, which is already grappling with a crippling slowdown that’s hurting the world’s second-largest economy.
Other property executives being probed:
- Shi Zhen, chairman of state-owned C&D Urban Services, on suspicion of unspecified violations
- Liu Hui, deputy general manager of state-owned Shenzhen Talents Housing Group, for “serious” law violations
- China Resources Land’s former chairman Tang Yong, for severe disciplinary and legal violations.
Zhuang is also chairman of C&D International Investment Group, which tumbled as much as 30% in Hong Kong stock trading on Wednesday morning.
China has been investigating a string of high-profile officials and executives in the run-up to a sensitive Communist Party congress where key leadership positions will be decided. Xi, who’s expected to secure a third term in the shake-up, has consolidated power over the past decade in part due to his corruption campaign.
Investing in China is becoming increasingly precarious after Xi clamped down on broad parts of the private sector, including the real estate industry and big technology companies. Several China Construction Bank executives have come under scrutiny this year for their links to property developers.
The country recently began a series of investigations into key figures responsible for shaping chip policy and investment. In July it announced investigations into top executives at a state-backed semiconductor fund as well as Minister of Industry and Information Technology Xiao Yaqing.
Meanwhile, the property sector’s more than year-long sales slump is hammering earnings. Powerlong Real Estate Holdings became the latest developer to issue a profit warning on Wednesday, saying core profit may have dropped as much as 37% in the first half from a year earlier.
Logan Group Co shares plunged as much as 58% in Hong Kong after resuming trading following a three-month suspension for failing to report audited earnings on time. The developer announced those results late Tuesday, saying core profit fell 20% last year.
Shenzhen-based Logan is among a growing number of Chinese real estate firms that are struggling to meet debt payments. The company is formulating a plan to deal with its obligations. BM