[ET Net News Agency, 17 January 2025] Mainland China announced this morning at 10
o'clock the successful achievement of last year's economic growth target of maintaining
5%. The GDP increased by 5% annually, with a quarterly growth of 5.4% in the fourth
quarter. However, the market seemed to have anticipated this, resulting in a relatively
stable response in the Chinese and Hong Kong stock markets. The Hang Seng Index
fluctuated, initially falling and then rising to 19,556 by midday, up 34 points or 0.2%,
with a turnover of nearly HKD 67.5 billion. The Hang Seng China Enterprises Index reported
7,091, down 7 points or 0.1%, while the Hang Seng Tech Index reported 4,473, up 55 points
or 1.3%.

"Jaseper Tsang: Only annual social retail data has a positive impact on the Hang Seng
Index"

During the day, Mainland China announced several significant data points, including GDP
growth for the fourth quarter and the whole year, as well as last month's industrial
production, fixed asset investment, and retail consumption data. While the data generally
exceeded expectations, the market response was subdued. Jaseper Tsang, the investment
director of Rafter Capital, told ET Net News Agency that the market had long expected
Mainland China to achieve the annual GDP growth target of maintaining 5%. Moreover, amid
the background of the market "export rush" before potential tariff hikes in the United
States, the industrial value-added performance surpassing expectations was also within
market expectations. The only positive impact on the market was the total retail sales,
which exceeded expectations. He believes that in the context of Mainland China's internal
demand, this data has a short-term stabilizing effect on the Hang Seng Index. Mainland
China's total annual social retail sales reached RMB 48.79 trillion, a 3.5% increase over
the previous year.
However, he further pointed out that the current support level of the 10-day moving
average (approximately 19,313) is not strong, and the U.S. stock market has shown
fluctuating trends. He anticipates that the Hang Seng Index may experience further
fluctuations and fall back below 19,000 points post-Trump's inauguration, before finding
stronger support around the 250-day moving average (approximately 18,160). With Trump's
upcoming presidency and the Lunar New Year holiday approaching in the Chinese and Hong
Kong markets, funds and investors are likely to adopt a wait-and-see strategy. In the
short term, the 50-day moving average (approximately 19,800) poses a significant
resistance.

"China Vanke's heavy debt affects property buying confidence, state-owned identity hinders
restructuring"

Yesterday (16th), Mainland Chinese media reported that Zhu Jiusheng , Executive
Director, President, and CEO of China Vanke (02202), was taken away by public security
authorities, although the reason for this action was not disclosed. Reports suggested that
relevant institutions in Shenzhen have become extensively involved with China Vanke, and
the company may face takeover and restructuring. However, Jiu updated his Moments early
this morning and briefly communicated with the media by phone to dispel rumours. China
Vanke's stock price dropped by 6.2% to HKD 4.56 by midday.
Jaseper Tsang stated that in Mainland China's business environment, if the central
government decides to intervene and take over, the cooperation of the existing top
management in investigations is a common practice. However, the news awaits official
confirmation. Given China Vanke's current financial situation, repayment pressures, and
progress in property sales for cash, central intervention and takeover may be necessary.
According to China Vanke's data, the annual sales in 2024 saw a significant decline of
34.59% year-on-year. Tsang emphasized that China Vanke's ability to repay debts mainly
depends on the progress of its property sales for cash. Based on China Vanke's current
financial and bond market performance, unless the central government injects a substantial
amount of funds into China Vanke, it is challenging to instil confidence in consumers to
purchase China Vanke's properties.
According to Wind data, as of 16 January 2025, China Vanke has domestic debts amounting
to RMB 32.645 billion maturing within a year, accounting for 67.05% of the total domestic
debt. Additionally, the company has US 127 million in foreign debts maturing within a
year. The company holds RMB 79.75 billion in cash, RMB 57.9 billion in inventory, and RMB
257.3 billion in other receivables. Furthermore, recent fluctuations in domestic bond
prices have led to temporary suspensions of trading for a total of five domestic bonds due
to a drop exceeding 20% on 16 January.
Tsang continued to state that given China Vanke's current financial and bond market
performance, issuing bonds for financing is no longer a viable option. Moreover, due to
its state-owned background, a significant restructuring of China Vanke could have broad
and profound market implications. Therefore, it is unlikely to undergo debt restructuring
like the private enterprise Sunac (01918). He believes that official intervention is more
likely, such as the central government arranging relevant institutions to invest or
purchasing its projects to help with cash flow.