Signs at New World Tower, which houses the headquarters of New World Development Co., in Hong Kong, China, Thursday, September 26, 2024. New World Development suspended trading of its shares in Hong Kong on Thursday morning.
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Shares of Hong Kong's main developer, New World Development, rose more than 20% after the resignation of Adrian Cheng, a member of the founding family.
Trading in Hong Kong-listed New World Development shares rose 23% after trading resumed on Friday.
The company said in a statement that it had suspended trading on Thursday “pending announcements” following the departure of Cheng, who will devote more time to “public services and other personal commitments.”
Chief Operating Officer Eric Ma Siu Cheung has been appointed as the new CEO in his place, the company said, marking a rare move for an outsider to lead the family business in Hong Kong.
The developer said in a filing last month that it expects to record a loss attributable to shareholders ranging from HK$19 billion ($2.4 billion) to HK$20 billion ($2.6 billion) for the fiscal year ending in June, affected by lower sales and investment losses. . and impairment charges.
The New World's woes come as ownership pain continues in Hong Kong and mainland China. The developer's statements indicate that it is also burdened by high levels of debt.
“This clearly shows that corporate governance is important,” said Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis. “Having all these rich people with their favorite sons or daughters, most of whom are male, is not the real way to run these companies.” an investment banking firm told CNBC.
“I think now that business leaders in Asia, especially business people in Hong Kong, have realized that when markets are tough, it is really difficult to do well, unless you have the best management,” she added.
The economist added that the main drivers of the rise in New World stocks are also due to the stimulus measures coming from China.
This rise comes amid a broader rise in stocks in Hong Kong and China in recent sessions after a series of stimulus measures announced by the Chinese central bank on Tuesday.
Top Chinese leaders also announced on Thursday that authorities must work to halt the decline in the real estate market. A readout of their meeting indicated that the leaders urged stronger fiscal and monetary policy support, addressing a range of topics including employment and an aging population.
