Deals
Vanke Share Slide May Spur Liquidity Squeeze at Baoneng Fund
- Baoneng borrows funds from banks to buy Vanke shares: JPMorgan
- Banks have option to liquidate funds if Vanke shares tumble
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China Vanke Co.’s shares have fallen below the level that JPMorgan Chase & Co. analysts said might trigger a liquidity squeeze at funds managed by its largest shareholder, Baoneng Group.
The Shenzhen-traded Vanke shares have tumbled almost 30 percent after they resumed trading July 4 following a six-month halt. The shares fell to 17.15 yuan on Tuesday, below the price that JPMorgan analysts estimated may trigger a forced liquidation of funds that Baoneng set up with borrowed cash from banks so it could build up its stakes in Vanke. Many private funds and hedge funds in China have agreements with investors spelling out mandatory liquidation levels if their holdings drop below a certain value.