Investors sell off their shares and bonds in Longfor Group – one of China’s top developers – as co-founder billionaire Wu Yajun left the company. Panic sales happened on October 31, as investors were worried about seemingly healthy home builders, of which Longfor is one of them.

Its share price dropped over 44% on Monday morning trading session, to $0.93, before rising up at $1.27. So since mid-September, Longfor’s values have lost more than 65%.

After the share plunge, the developer’s market value went down by $2.5 billion to $8 billion.

Not just stock, the bonds of the Forbes Global 2000 companies also suffer. Three onshore bonds of the companies lost at least 20% of their value, eventually leading to a trading halt. 

The resulting domino effect also wreaks havoc on other top developers. For example, a $216.5 million 6.8 percent onshore bond of Sunac – another major property developer – dipped more than 35%. 

An exchange filing late from last Friday, October 28, says that Wu quit her job due to age and health reasons. In an investor call on Sunday, October 30, Wu said she needs eye surgery and has other health problems. For the last three years, she has been getting ready to leave her job and choosing a suitable replacement.

The company also confirmed that it had enough cash on hand. Liquidity is not a problem.

Investors are still very concerned with China’s $2.7 trillion housing market after the China Evergrande Group case last year triggered a debt crisis that has lasted until now. American and European funds advise not to invest in mainland property developers.

Adding to it is that in mid-October, Cifi, one of the healthiest builders, defaulted on a bond payment. So Longfor, also one of the healthy developers, is facing more scrutiny.

Wu’s sudden resignation rings like an alarm in a context like that, leading to massive value loss. 

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