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BlackRock urgently sells Shanghai real estate at 30% off?

Reed
Reed
01-24

The domestic stock market has been sluggish recently, and although many are trying to boost market confidence, the returns have been poor.

Since the beginning of 2024, the domestic stock market has been in a prolonged slump, with occasional fluctuations but overall poor performance. There are various reasons for this, which I won't go into detail and analyze here.

In order to boost the sluggish stock market and give confidence to investors, multiple efforts have been made repeatedly. Whether it's increasing holdings or injecting capital, or issuing various documents and speeches, the effects have been minimal. With the stock index falling below 2800, can the next step of 2700 be defended? If 2700 fails, can we be sure that 2600 or 2500 will hold? The resulting panic and sense of crisis are hard to ignore and difficult to resolve.

This downturn in the stock market is not only reflected in the equity market and prices but also spreads to other circles. On January 22nd, there were rumors that BlackRock, the globally renowned asset management company, was offloading two Shanghai office buildings at a super low price of 30% below cost. Whether it's the actual sale price being 30% or that rumor is true, it indicates that BlackRock is selling at below-cost prices.

BlackRock is one of the world's top asset management companies, with its managed assets exceeding the GDP of most countries. Calling it a 'wealthy rival' would be an understatement. Every move by such a large company attracts the attention of global investors, and whether it's scaling up investments or pulling out has a strong influence.

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The two buildings that are rumored to be sold are the E and G office towers in the Changfeng Ecological Business District in Putuo District, Shanghai, with a total floor area of 27,800 square meters. BlackRock purchased them for 1.2 billion yuan in 2018, and a 30% price drop in six years is certainly a huge loss.

Many investors see BlackRock's sale of buildings as a pessimistic view of the domestic business environment, especially when combined with the continued stock market downturn since the start of the year, which has attracted a lot of attention. Although 1.2 billion yuan is not a major event in the current environment and capital market, it is undoubtedly a heavy blow to the already fragile confidence of investors. Does this mean that even the top asset management companies are bearish on the domestic environment?

However, this is not the case. Shortly after the rumor fermented, BlackRock officially responded: "We do not comment on individual investment projects.

The recent media reports are unrelated to BlackRock Funds and BlackRock Citic Wealth Management, and have no impact on their operations. We will continue to commit to our long-term development strategy in China to meet the investment needs of domestic investors and help them achieve their financial goals."

This response essentially confirms the truth of the rumors, but it is merely an ordinary sale. Investigations show that BlackRock still has numerous investments, projects, and operations in China and has no intention of a comprehensive withdrawal or large-scale sell-off. It can be said that this presses the pause button on the previous chaos.

The most thought-provoking aspect of this incident is not the incident itself but the panicked netizens or investors. The recent stock market downturn has undoubtedly hurt the majority of investors, with some even jokingly calling A-shares "China's own Northern Myanmar," an improper metaphor that exactly matches the low morale of stock investors.

The Shanghai Composite Index fell from a high of over 3200 points to below 2800 points in just half a year, seemingly repeating history.

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When the stock market frequently trends due to bad news, it indicates a dire situation, which is what has been happening daily. The market downturn has led to investor panic, which triggers selling and fleeing, leading to more panic and flight, potentially resulting in a complete collapse. This losing scenario is something no one wants to see.

To avoid such a collapse, many listed companies are trying to rescue the market, with multiple companies stepping in to buy back and increase holdings, such as Muyuan Foods, Rongsheng Petrochemical, Jiadu Technology, and Jihua Group, among others.

While these increases in holdings are helpful in the short term and may temporarily give some investors confidence, lost confidence can't be restored by a few listed companies alone. To truly rescue the stock market, the "national team" needs to step in.

On January 24th, the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) made another powerful move to rescue the market.

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The underlying reason for the heated discussions regarding BlackRock's property sale is investors' lack of confidence in the market. In such times, what is most important is to boost confidence rather than focus on specific data. This confidence stems from investors' trust in the "national team," believing that the situation will stabilize and even improve once the team takes action.

Risk Warning and Disclaimer

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.

The End

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