JPMorgan Says Shimao Deal Is ‘Red Flag’ Amid Liquidity Concern
- Brokerage lowers Shimao Group, Shimao Services to underweight
- China property sector likely to stay range-bound in near term
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A transaction between a subsidiary of Shimao Group Holdings Ltd. and a sister company is raising a “corporate governance red flag” amid tight liquidity for the Chinese developer, according to JPMorgan Chase & Co.
Shanghai Shimao Co.’s announcement Monday that it will sell property management assets to Shimao Services Holdings Ltd. underscores increasing market worries that property managers are being used as a “financial tool” by developers, JPMorgan Chase analyst Karl Chan wrote in a note to clients.