Mainland banks and property firms have one thing in common — few believe their strong past results can be sustained in a slowing mainland economy. Weaker home sales and reports of project discounts have shaken confidence in real estate and bad debt fears stalk banking shares.
But that’s no matter at Bank of Communications and China Vanke, where management are showing their faith with hard cash.
In May, the No 5 lender said a number of executives together bought more than 2 million yuan worth of shares in the company.
Then last week, a fund owned by 1,320 mid to top China Vanke managers expanded its stake in the developer, buying 333 million yuan (US$54.13 million) worth of stock at an average share price of 8.3 yuan.
There’s no lack of bearish reports on the threats to the old-economy sectors, but if managers, who should know best, are using their own money to bet on a better future, the 5-6 times earnings multiple may be overly pessimistic and undervaluing the long-term value of these businesses.
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