Chinese Estates subsidiary pockets HK$26 million windfall from a quick punt in Evergrande

Chinese Estates, the Hong Kong developer once controlled by Joseph Lau, proves itself an agile trader in China Evergrande

PUBLISHED : Wednesday, 31 May, 2017, 10:00pm
UPDATED : Thursday, 01 June, 2017, 3:00pm

Chinese Estates Holdings, controlled by Hong Kong property tycoon Joseph Lau Luen-hung’s wife Chan Hoi-wan, emerged a big winner in China Evergrande Group’s share price surge, making a profit of more than HK$26 million (US$3.34 million) in just a few days.

Records from the Hong Kong stock exchange reveal that Fair Eagle Securities, a wholly-owned subsidiary of Chinese Estates, traded a high volume of Evergrande shares from mid to late May, capitalising on a sharp rally in the share price of the mainland’s top homebuilder.

What’s really driving Evergrande’s ever-surging share price?

On May 12, Fair Eagle bought 38.9 million Evergrande shares. But the broker sold the bulk of them over the following two trading days, with 32.4 million shares disposed on May 15, and a further 6.3 million unloaded on May 16.

Fair Eagle switched back into buying mode the following trading week. The securities firm owned by Lau’s family acquired 26.2 million Evergrande shares on May 26, bringing its total holding to 29 million shares. But on May 29, a day when Evergrande surged 23 per cent to record, Fair Eagle was back in selling mode, unloading 8.9 million shares.

By calculating the buy and sell activity during May 12-15 and May 26-29 , based on the closing price on each trading day, Chinese Estates likely make a trading gain of HK$26 million, according to calculations by the Post.

Evergrande’s shares began rising sharply from mid-May, and have since nearly doubled in value.

The 65-year-old Lau in March announced a transfer of his 74.99 per cent shareholding with an estimated worth of HK$16.99 billion (US$2.17 billion) to his wife Chan Hoi-wan and son chairman Lau Ming-wai.

Lau, who was sentenced in absentia to more than five years jail term for bribery by a Macau court in 2014, has a close business partnership with Evergrande chairman Hui Ka-yan, who is also said to be a close personal friend.

Lau’s Chinese Estates Holdings was a cornerstone investor in Evergrande’s Hong Kong initial public offering in 2009.

In 2015, Evergrande acquired the Mass Mutual Tower in Hong Kong’s Wanchai district from Chinese Estates for HK$12.5 billion, setting a new record for a Hong Kong office building.

More recently, a consortium of Lau family members and investment partners, led by Lau’s wife Chan Hoi-wan, have reportedly subscribed to US$1 billion worth of high-yield bonds issued by Evergrande.