Chinese Property Companies in Hong Kong Head Downhill With Jiang Faction
The Hong Kong-listed Chinese property development company revealed on Jan. 15 that its listing properties had been locked up. This news immediately triggered panic in the stock market, and Fantasia’s share price plunged by 16 percent at one point, the largest decline for the group.
Bloomberg quoted a website announcement by Shenzhen Urban Planning and Land Resources Committee that said four suites of Fantasia’s project in Shenzhen had been locked. After the news was released on the morning of Jan. 15, stock sell-off began to emerge and the stock price dropped rapidly by 16 percent in the afternoon.
Although the price later rose again, it still fell by 4 percent with a turnover of HK $51,801,300 (US $6,681,850).
A number of Hong Kong media recently quoted a news report published on the mainland Chinese Internet titled “Names of Shenzhen Real Estate Companies on the Warning List.” A review of the list shows that some of the companies have close ties with the Jiang faction’s high-ranking officials. The most high-profile of these is Fantasia.
Another Hong Kong-listed Chinese real estate company, Kaisa Group, was allegedly involved in the case of former security czar and important Jiang faction member Zhou Yongkang. Kaisa has also had its listing properties locked, followed by debt default.
Fantasia was established by Zeng Baobao, the niece of former Chinese vice chair Zeng Qinghong. Zeng is one of the highest-ranking supporters of former Chinese Communist Party (CCP) leader Jiang Zemin, and he is being targeted by Jiang’s rival, current CCP leader Xi Jinping.
Xi has already investigated and purged many of Jiang’s supporters from the Party in his “anti-corruption” campaign.
Trouble for Zeng
Fantasia’s problems have been regarded as a signal of trouble for Zeng Qinghong, who used to be in charge of Hong Kong affairs.
In July 2014, Epoch Times reported that Zeng had been arrested, and his situation was similar to that of officials Bo Xilai and Zhou Yongkang after they were investigated in Xi’s campaign.
Zeng’s niece Zeng Baobao is Fantasia’s founder and CEO, and she holds about a 57 percent stake in the group. Many local tycoons who support Fantasia and have actively purchased its shares are also closely related to Zeng and to another Jiang supporter, Hong Kong Chief Executive Leung Chun-ying.
These tycoons include Emperor Group’s major shareholder Albert Yeung Sau-shing, “King of Toys” Francis Choi Chee-ming, and C.C. Land Holdings chairman Cheung Chung-kiu.
A source familiar with the matter has revealed that Albert Yeung Sau-shing is one of the main financial supporters of the Hong Kong Youth Care Association (HKYCA).
The HKYCA is a known CCP front group that has attempted to suppress the Falun Gong spiritual practice in Hong Kong since June 2012. Yeung has also published lengthy articles in the Daily News meant to discredit Falun Gong.
Changes in China
China’s political and economic situation is undergoing major changes. Since the CCP’s 18th National Congress in November 2012, Xi has used his anti-corruption campaign to sack more than 70 provincial and ministerial level officials, the vast majority of whom are Jiang supporters.
The Jiang faction is the largest privileged self-interest group in mainland China, with its members dominating major economic sectors.
Jiang’s family controls China’s telecommunications industry; the families of Zeng Qinghong and Zhou Yongkang control China’s oil industry; and Liu Lefei, son of current Politburo Standing Committee member Liu Yunshan, controls CITIC Investment Fund Management Limited. It is said that China’s large state-owned enterprises have almost become the private family assets of Jiang Zemin, Zeng Qinghong, Zhou Yongkang, and a few others.
The fight between the Jiang and Xi factions has grown in intensity. The persecution of Falun Gong was started by Jiang, and many senior officials purged in Xi’s campaign had actively participated in the persecution of Falun Gong. The current Chinese regime does not want to be the scapegoat for these crimes.
Meanwhile, the Jiang faction continues to create disturbances, including setting up political and economic barriers, to try to avoid being purged.
This battle has caused political turbulence in China, and the ongoing power shift could bring in a major economic reshuffle.
If Xi gains more power, it is expected that contracts signed by Jiang supporters with various large companies will be canceled, and companies and government officials close to the Jiang faction will be cleaned up.
On Jan. 15, Singapore independent credit research firm Lucror lowered the rating of Fantasia’s 2017 maturity bond from “hold” to “sell.” The reason given is that the news about the listing properties being locked will affect bond prices.
The firm’s Asian high-yield-products research director Charles Macgregor commented in the report, “Investors are now very cautious about the potential regulatory and political risks associated with the Chinese real estate developers.”
Bloomberg’s data shows that Fantasia still has bonds worth $1.08 billion not expired yet. Its $250 million bonds scheduled to expire in 2017 fell by 14.4 to 80.2, a record low.
Epoch Times staff recently visited Fantasia’s office in Causeway Bay and found the door locked. No one answered phone calls at Fantasia’s Hong Kong and Shenzhen investor relations department.
Fantasia subsequently issued a clarification announcement, saying the company sold four units to an independent third party in 2012 and 2013. They stated that the company does not own the four locked units, and the locking has nothing to do with the company.
Translated by Susan Wang. Written in English by Sally Appert