AS one of the world’s biggest investors in developing countries, Aberdeen Asset Management Plc. is no stranger to market drama. But even this hardened money manager can’t stomach the frenetic battle for control at China’s biggest real estate developer.

    The US$403 billion investment firm sold all its Shenzhen-listed shares of China Vanke Co. after a six-month trading halt was lifted July 4, said Frank Tian, who helps manage Aberdeen funds from the firm’s Hong Kong office. He cited uncertainty over the developer’s future amid a protracted ownership struggle involving at least three strategic shareholders.

    Aberdeen’s decision to sell is hardly unique as investors struggle to make sense of China’s most high-profile corporate battle, a tangled web of competing interests, inscrutable motives and no clear endgame.

    Investment managers and advisers have cut their position in Vanke’s Shenzhen-traded stock to 7.2 percent of publicly-reported holdings from 19 percent in December, even as corporate investors including China Evergrande Group built up stakes.

    “We see lots of uncertainties and it didn’t make sense to keep holding onto it,” Tian said. The fight for board control is “definitely an issue for holding stock because it can take so many twists and turns, as we have seen.”

    Aberdeen’s funds owned a combined 11.36 million Shenzhen-traded shares of Vanke when trading was halted in December, or 0.12 percent of the stock outstanding. The money manager has also reduced its holdings of Vanke’s Hong Kong-listed shares in the past month, Tian said.

    Vanke’s battle for control spilled into the public domain last year when Baoneng Group, an obscure Shenzhen-based conglomerate, emerged as the developer’s biggest shareholder. Vanke chairman Wang Shi publicly decried Baoneng as “unwelcome” and embarked on a plan to sell shares to Shenzhen’s metro operator, a move widely viewed as an attempt to dilute Baoneng’s stake. That plan was met with opposition from another key shareholder, State-owned China Resources Co.

    After Vanke appealed to authorities to scrutinize how Baoneng financed its share purchases, the China Securities Regulatory Commission publicly reprimanded Vanke’s stockholders and management July 22 for escalating the conflict instead of resolving their differences.

    Another surprise investor burst onto the scene this month. Evergrande, a rival developer run by billionaire Hui Ka-yan, said in regulatory filings that it had amassed a 5 percent stake as of Aug. 8. It cited Vanke’s “strong” financial performance for the purchases, without providing further detail on its motives.

    Sell-side stock analysts have mostly stuck with their positive recommendations on Vanke as the drama played out. For both the mainland and Hong Kong shares, a majority of analysts have a rating equivalent to buy or hold.

    It’s been a roller-coaster ride for investors. Vanke’s shares in Shenzhen plunged almost 30 percent in the four weeks through Aug. 1, playing catch-up to Hong Kong as the six-month trading halt was lifted. The stock reversed its slump this month, surging more than 30 percent on news of Evergrande’s purchases.

    Value Partners Group Ltd., a Hong Kong-based investment firm, has joined Aberdeen in cutting its stake in Vanke A shares amid the volatility. The developer dropped out of the top five holdings in the US$111 million Value Partners China A-Share Select Fund in July, according to a monthly update to clients.

    (SD-Agencies)