According to information from the Hong Kong stock exchange, JP Morgan Chase & Co used a flurry of share trades to build its stake in China Vanke, the third largest real estate developer in China, to 11.13 percent as of November 7th.
Last week’s investment was the seventh time that the American institution has increased its shareholding in the Chinese developer since the beginning of this year, with its stake climbing by 4.1 percentage points from 7.03 percent on January 16th to the current 11.13 percent.
JP Morgan’s acquisitions coincide with a wave of sales by Shenzhen Baoneng and its affiliates, major shareholders in China Vanke which have cut their holdings in the property developer by 67 percent from 25.4 percent at the end of 2017 to 8.39 percent as of September 30th.
Baoneng and its allies were forced by government regulators to divest their shares in the Shenzhen-based developer after their attempt at a hostile takeover of Vanke was thwarted by Shenzhen Metro Group, which became the developer’s largest shareholder in 2017.
A Busy Week for Vanke Shares
The disclosure of interests by the Hong Kong exchange shows that JP Morgan Chase & Co bought 2,022,798 shares of China Vanke on November 7th. With the average price for per share reaching HK$26.0932 ($3.33), the New York-based investment bank last Wednesday spent a total of HK$52,781,272 to increase its holdings in China’s third largest developer.
JP Morgan Chase & Co acquired its latest tranche of equity in Vanke by buying and selling shares over the first three days of last week. On November 5th, the largest bank in the US bought 2,118,690 shares of Vanke at HK$26.0747 per share, and increased its holdings to 11.06 percent from 10.08 percent. However, one day later, it sold 1,099,118 shares at HK$25.8476 per share and decreased the holdings of China Vanke to 10.97 percent.
Wednesday’s investment was the American bank’s third straight day of heavy trading in Vanke stock, as it bought back shares in the company and finally increased its holdings to 11.13 percent in China Vanke’s total H-shares, issued through the Hong Kong Exchange.
Shareholder Roster Gets a New Look
JP Morgan’s investment and divestment drew the attention of other financial heavyweights to Vanke. Citigroup on Tuesday followed JP Morgan Chase by increasing its holdings in the developer by 0.5 percentage points to 9.07 percent, while BlackRock on Monday bought 2,350,000 shares of Vanke stock and increased its holdings to 7.65 percent from their 7.59 percent level on October 26th.
According to Vanke’s 2018 interim report, JP Morgan Chase & Co was its second largest shareholder on the H-share market and the fourth largest shareholder of the company overall, after Shenzhen Metro Group — which then ranked first with a 29.4 percent stake, Baoneng Group affiliate Jushenghua, Anbang Insurance Group, and BlackRock.
The American investment bank, which then held 9.24 percent of China Vanke’s H-shares, owned 0.97 percent of the total issued share capital of China’s third largest developer by sales as of the end of June.
JP Morgan Buys as Baoneng Sells
JP Morgan is building its stake in Vanke in the aftermath of Baoneng’s frustrated attempt at a hostile takeover.
Shenzhen Jushenghua Industrial Development, a subsidiary of Shenzhen financial conglomerate Baoneng Group, initiated a takeover campaign to purchase a major stake in China Vanke in the end of 2015.
Between late 2015 and the end of 2017, Baoneng and its affiliate Shenzhen Jushenghua Company bought over 20 percent of Vanke’s equity, before the developer’s management pulled in Shenzhen Metro Group to purchase 29.38 percent of its issued capital and become the largest shareholder.
JP Morgan’s investment coincides with Baoneng’s forced divestment, during which the group and its affiliates have sold 17 percent of their shares in Vanke since the end of last year. By the end of September, Jushenghua Group owned 8.39 percent of China Vanke’s total issued capital, while JP Morgan Chase & Co surpassed Blackrock to become the largest H-shareholder of Vanke with its recent investment.
Vanke achieved an encouraging performance in the first half of this year, as its interim report showed that the company’s revenues increased by 55.15 percent to RMB 104,859,125 in the six months ending on June 30th, while the developer’s gross profit surged by 72.1 percent compared to the same period last year.