Hong Kong’s New World Development shares surge 23% after CEO resigns
Signage at the New World Tower, which houses the headquarters of New World Development Co., in Hong Kong, China, on Thursday, Sept. 26, 2024. New World Developmen suspended trading of its shares in Hong Kong on Thursday morning.
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Shares of Hong Kong’s major developer, New World Development surged over 20% following the resignation of Adrian Cheng, a member of the founding family.
Hong Kong listed shares of New World Development traded 23% higher after trading resumed on Friday.
The company said in a statement that it halted trading on Thursday “pending the release of announcements” following the departure of Cheng, who will be devoting more time to “public services and other personal commitments.”
In his stead, Chief Operating Officer Eric Ma Siu-Cheung has been appointed as the new CEO, the company said, marking a rare move for an outsider to lead the family business in Hong Kong.
The developer, in a filing last month, said it expected to record a loss attributive to shareholders of HK $19 billion ($2.4 billion) to HK $20 billion ($2.6 billion) for the financial year ended in June, dragged by declining sales, investment losses and impairment charges.
New World’s woes come as property pains continue to plague Hong Kong and mainland China. The developer’s statements indicate that it is also burdened by elevated debt levels.
“This is clearly showing that corporate governance does matter. Having all of these tycoons with their preferred sons or daughters, mostly sons, is not really the way to run these companies,” Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis, an investment banking company, told CNBC.
“And I think by now, tycoons in Asia, especially Hong Kong tycoons, realized that when markets are tough, it’s really hard to to do well, unless you have the best management,” she added.
The economist added that the key drivers for New World’s surging shares are also owed to the stimulus measures coming out of China.
The rally comes amid a broader rally in Hong Kong and Chinese equities in recent sessions following the slate of stimulus measures announced by China’s central bank on Tuesday.
China’s top leaders also declared on Thursday that authorities must work to halt the real estate market decline. A readout of their meeting indicated that leaders urged for enhanced fiscal and monetary policy support, addressing a range of topics including employment and the ageing population.
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