China Vanke Could Keep Posting Losses Until 2028 — Market Talk

Vanke can now pay back 40% of the principal of a bond worth 1.1 billion yuan, equivalent to $158 million. "China Vanke Wins Reprieve on Overdue Bond Payments," at 0442 GMT, incorrectly said it was equivalent to $158 billion.

By Jiahui Huang

China Vanke, one of the country's largest real-estate companies, received a small reprieve as its bondholders approved a delay of payments on an overdue bond.

The embattled home builder has been battered by the prolonged crisis in the Chinese property sector but is viewed as one of China's more financially resilient developers and one of the few major players yet to default on its debt.

Vanke, in a filing to the Hong Kong and Shenzhen stock exchanges Wednesday, said that a bondholders' vote showed 92% approval for one of Vanke's proposed extensions for payments on a yuan-denominated bond.

Vanke can now pay back 40% of the principal of a bond worth 1.1 billion yuan, equivalent to $158 billion, on January 30 and delay payments on the remainder for a year.

Bondholders had previously rejected proposals to restructure payment on the bond, which was due Dec. 15 last year.

"We think the sweetened offer of paying 40% of principal immediately was favored by most creditors, and Vanke will likely propose similar terms for the 5.7 billion yuan of bonds that are in the grace period," Morningstar equity analyst Jeff Zhang said.

Many of China's other large developers have defaulted on their debt and investors continue to speculate over how policymakers plan to address the real-estate slump as it drags on into a sixth year.

Given the heavy weighting on household balance sheets, letting the crisis continue unabated will keep consumer sentiment weak and weigh on consumption.

Vanke's shares rose 2.0% to 3.55 Hong Kong dollars by midday Wednesday, or equivalent of 46 U.S. cents, outperforming the benchmark Hang Seng Index which slipped 0.15%.

Morningstar's Zhang added that Vanke's liquidity is likely to remain subdued due to the slump in its contracted sales and the absence of government support.

There is some uncertainty over whether Vanke can even repay the 40% of the principal due, he said.

"The company may still seek a holistic debt restructuring if its balance sheet quality further deteriorates," Zhang said.

Write to Jiahui Huang at jiahui.huang@wsj.com

A potential default by China Vanke could cause irreversible damage to the company's credit profile, but the ripple effects will likely be contained, unlike the systemic shocks in 2021, HSBC Global Research analysts write in a note. The company's market share shrunk to 1.7% last year from 3.4% in 2021. Due to limited land replenishment, the company's aging land bank is struggling to compete with quality state-owned enterprises, they add. Even an aggressive cut in prices would pose limited downside risks to key developers, HSBC says. The bank is less concerned about the impact of Vanke and advocates a bottom-up approach for stock picking. Among property stocks, HSBC likes China Resources Land, C&D Group and Seazen Group. (jiahui.huang@wsj.com; @ivy_jiahuihuang)

By Jiahui Huang

Chinese Vanke said its executive vice president has resigned after reaching retirement age, marking the departure of a long-serving executive at one of China's largest property developers.

The company said in a filing with the Shenzhen Stock Exchange late Thursday that Yu Liang submitted a written resignation and no longer holds any position at China Vanke.

Yu's resignation will not cause the number of board members to fall below the legal requirements and will not affect the company's normal operations or those of its board, the filing said.

Yu became chairman of the board in 2017 and he has overseen the company through the boom and subsequent downturn in China's property sector. Once among the country's largest and most influential developers, Vanke has faced mounting challenges since the sector entered a prolonged slump in 2021.

Despite the pressures, Vanke has long been viewed as one of China's more financially resilient developers and remains among the few major players that have yet to default during the property crisis.

Still, investor confidence has been tested.

In November, the company said that it was seeking to delay repayment of principal on a 2 billion yuan medium-term note due December 15, 2025.

The developer continues to work to renegotiate its debt obligations, the filing said.

Write to Jiahui Huang at jiahui.huang@wsj.com

By Jiahui Huang

Chinese Vanke said its executive vice president has resigned after reaching retirement age, marking the departure of a long-serving executive at one of China's largest property developers.

The company said in a filing with the Shenzhen Stock Exchange late Thursday that Yu Liang submitted a written resignation and no longer holds any position at China Vanke.

Yu's resignation will not cause the number of board members to fall below the legal requirements and will not affect the company's normal operations or those of its board, the filing said.

Yu became chairman of the board in 2017 and he has overseen the company through the boom and subsequent downturn in China's property sector. Once among the country's largest and most influential developers, Vanke has faced mounting challenges since the sector entered a prolonged slump in 2021.

Despite the pressures, Vanke has long been viewed as one of China's more financially resilient developers and remains among the few major players that have yet to default during the property crisis.

Still, investor confidence has been tested.

In November, the company said that it was seeking to delay repayment of principal on a 2 billion yuan medium-term note due December 15, 2025.

The developer continues to work to renegotiate its debt obligations, the filing said.

Write to Jiahui Huang at jiahui.huang@wsj.com

By Sherry Qin and Tracy Qu

Hong Kong stocks ended 2025 with a second consecutive annual gain, posting their best performance since 2017 in percentage terms, thanks to a tech rally fueled by artificial intelligence.

The city's benchmark Hang Seng Index finished the year up 28%, making it one of Asia's best performing markets.

In Mainland China, the benchmark Shanghai Composite Index rose 18% for the year, marking its strongest performance since 2019, after reaching its highest closing level in a decade in August. The Shenzhen Composite Index 29%, while the tech-heavy ChiNext Price Index surged 50%.

China's advances in artificial intelligence, its continued push for technological self-reliance and resilience in global trade have helped boost investor confidence, easing concerns over weak domestic demand and persistent deflation.

China's goods trade surplus topped $1 trillion for the first time in the year through November, underscoring the strength of its manufacturing base despite President Trump's steep tariffs on Chinese goods.

Investor sentiment was further buoyed by a trade truce reached in October following the first face-to-face meeting in six years between President Trump and Chinese leader Xi Jinping.

"A one-year trade truce--albeit temporary--is positive for sentiment as it reduces concerns around the uninvestability" of Hong Kong and China stocks, Nomura analysts said in a research note.

Despite lingering geopolitical uncertainty, Chinese tech stocks have shone this year since the so-called "DeepSeek moment" in January, when the Chinese startup released a large language model seen as a rival to OpenAI's ChatGPT. Beijing has since made technological self-sufficiency a priority in its next five-year plan beginning in 2026, further fueling investor enthusiasm surrounding artificial intelligence.

"AI has changed the game for Chinese tech equities," Goldman Sachs analysts said in a recent note.

Alibaba Group and Tencent Holdings, widely seen as proxies for China's AI development, rose 73% and 43.65%, respectively. Baidu, which operates the AI chatbot Ernie Bot, gained 59% over the year.

Trade relations between the two countries remain strained as Beijing's top cybersecurity regulator earlier in the year urged big tech companies not to buy Nvidia's chips. Chinese chipmakers have emerged as major beneficiaries of that development.

Shares of SMIC, China's largest contract chip maker, more than doubled in Hong Kong this year. Moore Threads and MetaX, two Chinese AI chip startups that made blockbuster market debuts earlier this month, ended the year up more than 400% from their listing prices.

The AI frenzy has also driven a fresh wave of listings, spanning companies involved in large language models, robotics and biotechnology. Hong Kong reclaimed the top spot in the global IPO market for the first time since 2019, according to a recent KPMG report.

"We expect this upward trend to continue into 2026," said KPMG China's Paul Lau. "In particular, the pace of AI-related listings is poised to accelerate as the technology matures and is adopted more widely across various industries."

Chinese AI model developers MiniMax and Zhipu have already secured IPO slots for January 2026.

Still, risks remain. China Vanke's recent struggles, including a near-default and request for debt extensions, have renewed concerns that the country's prolonged property downturn has yet to bottom out. Hong Kong's Hang Seng Mainland Properties Index ended the year up 5.2%, lagging the broader market.

As startups rush to go public, artificial intelligence is set to remain a dominant theme for Chinese and Hong Kong markets in 2026. Analysts say a sustained rally will also hinge on whether China can revive domestic demand and stabilize its property sector.

After two consecutive years of positive returns, China has shown global investors that it remains investible, with a slow bull market likely in the making, the Goldman analysts said.

Write to Sherry Qin at sherry.qin@wsj.com and Tracy Qu at tracy.qu@wsj.com