A sign at the New World Tower, which is the headquarters of New World Development Co., in Hong Kong, China, Thursday, September 26, 2024. New World Development suspended trading of shares in Hong Kong on Thursday morning.
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Shares of Hong Kong’s leading developer New World Development rose more than 20% after the resignation of Adrian Cheng, a member of the founding family.
Hong Kong New World Development shares traded 23% higher after trading resumed on Friday.
The company said in a statement that it halted trading on Thursday “pending further announcements” following the departure of Cheng, who will devote more time to “public service and other personal commitments.”
In his place, 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 a family business in Hong Kong.
The developer, in a filing last month, said it is expected to record attributive losses to shareholders of HK $19 billion ($2.4 billion) to HK $20 billion ($2.6 billion) for the financial year ended in June, dragged down by declining sales, investment losses. and impairment charges.
The New World Troubles come as property woes continue to plague Hong Kong and mainland China. The developer’s statement shows that it is also burdened by a high level of debt.
“This clearly shows that corporate governance is very important. Having all these tycoons with their favorite sons or daughters, usually sons, is not the way to run these companies,” Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis, an investment banking firm, told CNBC.
“And I think now, the tycoons in Asia, especially the Hong Kong tycoons, know that the market is tough, it’s really hard to do, unless you have the best management,” he said.
The economist added that the main driver for surging New World shares is also owed to the stimulus measures coming out of China.
The rally comes amid a rally in Hong Kong and Chinese equities in the recent session following stimulus measures announced by China’s central bank on Tuesday.
China’s top leaders also announced Thursday that authorities must work to prevent a decline in the real estate market. A reading from the meeting showed that leaders called for better fiscal and monetary policy support, addressing a range of topics including employment and an aging population.
