Cross-posted from Investing in Chinese Stocks.
Many businesses went into real estate development post-2008 in order to earn big and easy profits, but now they are beating a retreat as the profits disappear.
“From what we’ve monitored, this year real estate transactions are up at least 20% from last year, involving more than ￥10 billion,” said an official from the China Beijing Equity Exchange. Wiki:
China Beijing Equity Exchange is an equity transaction bourse and platform run by the government of Beijing for mergers, acquisitions and restructuring of state-owned enterprises.
Recently, a Sinopec subsidiary sold a 25.17% stake in a Henan developer, though it still holds ￥160 million yuan of the firm’s debt.
As many as 75 state owned enterprises have exited real estate this year:
So far in 2014, government companies including China Petroleum and Chemical Corp, China National Chemical Corp, and China Resources Gas Group in the petrochemical sector have all sold off real estate assets.
……In one of the largest divestments of real estate interests by a state-run firm this year, China Petroleum and Chemical Corp — also known as Sinopec — put up its 25.17 percent stake in Henan Huacheng Real Estate for sale, along with RMB163 million (US$26.3 million) in creditor’s rights on sale. While market estimates put the price of the equities at RMB 164 million yuan (US$26.4 million), Sinopec eventually sold its interest for RMB 145 million, an effective discount of 10 percent.
Asked to explain the reason for the subpar pricing, a staff member of Henan Huacheng pointed out that, “This project was transferred quickly because the SASAC long ago issued a decision that non-real estate companies cannot be involved in the property industry, and a petrochemical company is certainly not a real estate firm.”
According to CBEX, there has been more than ￥20 billion in real estate transactions on the exchange this year. 企业加速撤离房地产 超百亿资金出逃
