"Major Banks" JP Morgan: Doubts about the authenticity of the report on Vanke's 80 billion yuan rescue plan

JP Morgan published a report stating that Octus reported unverified market speculation, indicating that the Shenzhen municipal government is preparing a rescue plan of RMB 80 billion (the same below) for Vanke (02202.HK) (including a RMB 20 billion stock placement) to avoid its default. The bank is skeptical about the authenticity of this report. Firstly, among the previous 9 instances of market speculation regarding financial support, only one was confirmed to be true. Secondly, the amount of RMB 80 billion is also unclear; the report did not specify whether this is new financial support or merely refinancing/credit limits (the two are not significantly different). The report mentioned that the central government emphasized the importance of avoiding default, but the bank questioned why Vanke's default remains important in today's environment (most private developers have already defaulted, and Vanke currently has only a 1% market share).

Although the Shenzhen Metro still has the opportunity to provide further financial support (similar to its recent assistance to Vanke in paying 40% of the principal for bond extensions), the bank believes there is no urgent need for the government to spend RMB 80 billion just to avoid default. Even if support is indeed provided, JP Morgan believes its purpose is more likely to assist Vanke in completing project construction. JP Morgan still considers an overall bond restructuring to be a more reasonable solution. That said, the bank expects the stock price to show a positive reaction in the short term