THE majority shareholder of China Vanke, China’s second-largest property developer by sales value, has expressed its support of the Shenzhen-based firm, including making a commitment to spend more than US$1 billion on its projects.

State-owned Shenzhen Metro Group, the largest shareholder of Vanke, told a meeting with financial institutions Monday that it is optimistic about Vanke’s prospects and has never planned or expressed intentions to reduce its stake.

Shenzhen Metro said that it had prepared more than 10 billion yuan (US$1.4 billion) worth of “market tools” to boost Vanke’s cash flow. That could include taking over some of Vanke’s urban renewal projects and capitalizing on its developments, Shenzhen Metro said.

Shenzhen’s State-owned assets supervision and management commission, which owns Shenzhen Metro, also said at the meeting that it has confidence in Vanke and enough cash and tools to support the builder if needed.

Shenzhen Metro owns more than 30% of Vanke, according to FactSet.

Shenzhen Metro is also actively preparing to purchase the company’s bonds in the open market.

Vanke, like may of its peers, has been hit by declining property sales amid a downturn in the domestic property sector.

The slumping property market has also become a significant drag on China’s economic recovery, with authorities and policymakers having introduced waves of stimulus measures to help revive activity in the sector that by some estimates makes up a quarter of the nation’s economic output.

“Vanke is a household developer in China. It is important for the government to give strong action to show support,” said Raymond Cheng, head of China research at CGS-CIMB Securities.

China’s new home sales, measured by floor area, fell around 10% in October, according to a survey by China Index Academy, a real estate research firm, narrowing from a 20% slump the previous month, the firm said.

Official data showed property sales fell 7.5% in the January-September period compared with a year earlier.

Vanke last month reported a 20.3% fall in net profit in the first three quarters. (SD-Agencies)