China Vanke Faces Crisis: CEO's Detention Shakes Property Market

China Vanke's shares plummeted after reports of its CEO's detention, with Shenzhen authorities overseeing the state-backed developer. Financial troubles stem from debt and declining sales, notably when it fell from second to fifth in sales value in 2023. This event may further undermine confidence in China's property sector.

The Hong Kong-listed shares of China's property giant, China Vanke, experienced a sharp decline of over 8% following the reported detention of its CEO on Friday. According to state media, a Shenzhen government task force has intervened to monitor operations at the state-backed developer.

The Economic Observer suggested a possible government takeover and reorganization, though Vanke has not commented, and attempts to reach the Shenzhen government for a statement were unsuccessful. Vanke has been in financial distress since it sought to extend its debt maturity last year amid plummeting sales.

Ranked fifth by sales value compared to second in 2023, the company's woes are emblematic of China's real estate market crisis. With the sector contributing significantly to the economy, ongoing debt struggles and stalled government rescue initiatives compound the challenges for beleaguered firms like Vanke.

(With inputs from agencies.)