Chinese investors ignore default risks at Sunac
July 17, 2017 Category Stock Markets, Weekly
Investors are piling into Sunac China Holdings, pushing the shares to a record high, ignoring warnings by the world’s three dominant credit rating agencies on the rising default risks caused by its USD9.3 billion acquisitions of Wanda’s assets. Sunac’s shares closed midday on July 14 at HKD16.92, bringing its advance to 15.9% since resuming trade on July 11. However, the gain narrowed by the end of the day, with the stock closing up 1.69% to HKD16.88. “Mainland investors overwhelmingly care about the company’s sales growth and land bank, while heedless of debt and other risks,” said Carol Wu, China Property Analyst at DBS Vickers. “This is in contrast with Hong Kong and U.S. investors, who are concerned with Sunac’s risk side.” Fitch Ratings cut Sunac’s credit rating to BB-, citing what it called the company’s “acquisitive business approach”. The move comes after Sunac agreed to buy hotels, land and theme park projects from Dalian Wanda Group for CNY63.2 billion, in China’s largest property deal.
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